Although I’m not trying to alarm anyone, investors may want to consider so-called crash-proof stocks. These are enterprises that enjoy both analyst support and command reliable, predictable businesses. By nature, they’re boring and with perhaps only one exception, will likely not yield gargantuan returns. Nevertheless, they should help keep the lights on in your portfolio.
Fundamentally, investors must at least consider the best stocks to buy before a crash if they intend to stay in the market. Worryingly, a MarketWatch op-ed warned that if you’re a student of history, the bank failures we suffered may only be the beginning. On a personal note, I’m note sure how the experts can be so calm about the situation, other than perhaps not wanting to spark a mass panic. Again, that’s not what I’m trying to do here. However, it’s probably prudent to learn how to create a crash-proof portfolio, particularly with safe stocks for long-term investors. Here are some ideas to consider.
| WM | Waste Management | $168.43 |
| PG | Procter & Gamble | $156.03 |
| SRE | Sempra Energy | $154.92 |
| FIVE | Five Below | $195.80 |
| PGR | Progressive | $129.52 |
| HD | Home Depot | $289.62 |
| CVS | CVS. Health | $70.68 |
Waste Management (WM)
When it comes to the subject of how to create a crash-proof portfolio, investors should focus on indispensable services. I can’t think of a better enterprise in that regard than Waste Management (NYSE:WM). As many observers point out, we live in a consumer-driven economy. Therefore, we’re constantly buying stuff and getting rid of it. Unfortunately, matter just doesn’t disappear, which is where Waste Management comes in.
Financially, the company benefits from a predictable business profile, to no one’s surprise. Its three-year revenue growth rate stands at 9.5%, above 63.45% of sector players. On the bottom line, its trailing-year net margin comes in at 11.33%, outflanking 72.22% of the field. As well, Waste Management is an extremely high-quality enterprise, as determined by its lofty return on equity (ROE) of 32.27%.
Finally, analysts peg WM as a consensus moderate buy. This assessment breaks down as five buys and six holds. Overall, the experts’ price target lands at $172.40, implying nearly 3% upside potential. Thanks to its critical business, WM makes a case for crash-proof stocks to buy.
Procter & Gamble (PG)
A consumer goods giant, Procter & Gamble (NYSE:PG) easily ranks among the best stocks to buy before a crash. Obviously, investors received a harsh lesson of its relevancy during the worst of the Covid-19 pandemic. Even with the mysterious SARS-CoV-2 virus floating around seemingly ready to strike, people hounded grocery stores and similar retailers in the hunt for toilet paper. Put another way, people will buy the essentials, come hell or high water.
Financially, Procter & Gamble doesn’t offer the most remarkable of financial profiles. But the important point is that it gets the job done. Notably, the company benefits from a decent balance sheet, particularly its Altman Z-Score of 5.36. This indicates high fiscal stability and low bankruptcy risk.
On the bottom line, P&G really comes alive. Its trailing-year net margin comes in at 17.69%, ranked better than 91.66% of the field. Also, its ROE prints an incredibly robust 31.72%. Lastly, analysts peg PG as a consensus moderate buy. Their average price target is $165.82, implying nearly 7% upside potential. It may be boring but it’s also one of the crash-proof stocks.
Sempra Energy (SRE)
One of the top utility companies in the nation, Sempra Energy (NYSE:SRE) makes a viable case for cash-proof stocks for two key reasons. First, Sempra benefits from a natural monopoly. Basically, the barrier to entry is so steep that would-be competitors don’t even try.
Second, Sempra accrues organic rewards for targeting segments of the ultra-lucrative Southern California market. Sure, you hear a bunch of partisan chatter about the Golden State being incredibly expensive, forcing to migrate out. But so many people are moving in, which makes Sempra a gold mine among safe stocks for long-term investors. Financially, Sempra doesn’t offer a remarkable profile, much like other utilities. However, it enjoys a robust net margin and consistent profitability. To close out, analysts peg SRE a consensus moderate buy. Their average price target lands at $169.67, implying almost 11% upside potential.
Five Below (FIVE)
A chain of specialty discount stores, Five Below (NASDAQ:FIVE) is a step above in terms of that categorization. Rather than focusing exclusively on products that sell for a buck or less, most of its inventory sell for less than $5, hence the name. Also, Five Below features a small assortment of products from $6 to $25, offering a bargain hunt for all shoppers. It’s a compelling example of crash-proof stocks.
Financially, the company prints excellent growth stats. For example, its three-year revenue growth rate pings at 18.8%, above 81.67% of sector rivals. Also, its EBITDA growth rate during the same period comes in at 18.6%, above 66.78%. On the bottom line, Five Below’s net margin impresses at 8.5%, outflanking 81.39% of its peers. Notably, it enjoys a high-quality business with an ROE of 22%. Therefore, it could be one of the top stocks to survive a market crash, both for its fiscal performance and for its relevancy.
Turning to Wall Street, analysts peg FIVE a consensus strong buy. Their average price target hits $224.63, implying almost 16% upside potential.
Progressive (PGR)
For investors seeking crash-proof stocks, you don’t need to look much further than Progressive (NYSE:PGR). Obviously, insurance companies like Progressive present an incredibly boring profile. However, boring is good during times of uncertainty. Plus, the sector stalwart – known mostly for its auto insurance policies – benefits from a captive audience.
Basically, almost every state in the Union requires drivers to hold auto insurance. Plus, whether mandated or not, having insurance just makes good logical sense, particularly in the post-pandemic environment. To be sure, prospective investors should note that PGR lost about 3% since the January opener. Unfortunately, it incurred recent volatility. Nevertheless, the core relevancy of its business should help PGR gradually rise higher.
Another factor to consider is that its financials don’t exactly stand out. However, the company posts solid revenue growth and consistent profitability. Looking to the Street, analysts peg PGR as a consensus moderate buy. Their average price target lands at $147.07, implying nearly 17% upside potential.
Home Depot (HD)
If you want some pointers about the best stocks to buy before a crash, former Home Depot (NYSE:HD) CEO Bob Nardelli issued a grim warning regarding the “very complex” economy we have. Specifically, he warned that bankruptcies may continue accelerating or continue shrinking their physical footprint. While that might impact Home Depot as well, I believe the company stands a bit above the rest.
Fundamentally, we’re not just dealing with a discretionary retailer but also an enterprise that delivers valuable services. I’ve mentioned this before but back during the Covid-19 crisis, Home Depot kept its doors open for longer than other retailers to help folks get through the calamity. The company also acts as a critical goods supplier during periods of natural disasters.
Financially, Home Depot commands a solid top line with a three-year revenue growth rate of 15.2%. This stat ranks above 78.79% of other retailers. Also, its net margin comes in at 10.87%, above 87% of the field. Lastly, analysts peg HD as a consensus moderate buy. Their average price target hits $337.78, implying over 18% upside potential.
CVS Health (CVS)
A healthcare company best known for its retail pharmacy chain, CVS Health (NYSE:CVS) could make a case for crash-proof stocks because it represents a necessity. From prescription drugs to over-the-counter meds, CVS provides to everyone’s health-related needs. And since demand remains consistent and largely predictable, the company enjoys cynical upside.
However, CVS stock has been incredibly volatile this year. Although the underlying enterprise beat first-quarter earnings and revenue estimates, management lowered its guidance for the full year. Naturally, investors didn’t care for that too much. Since the January opener, CVS slipped 26%.
Nevertheless, for the intrepid contrarian, the company may be undervalued. Right now, the market prices shares at a forward multiple of 7.69. As a discount to projected earnings, CVS ranks better than 88.89% of the competition. On a final note, analysts peg CVS as a consensus strong buy. On average, the experts’ price target comes in at $102.60, implying over 49% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.