Which way is the stock market headed? It is difficult to say at this point. After rising in the year’s first half, stocks fell in August and have been moving sideways so far in September. Analysts and media seem divided on the way forward. Headlines suggest that we are about to enter a bull run for the final quarter of the year or experience a full-blown market crash. Some notable investors such as Warren Buffett remain bullish on stocks, while others such as Michael Burry are placing billion dollar bets on a coming crash.
The ultimate outcome seems likely to be tied to how the economy performs and whether the United StatesFederal Reserve continues raising interest rates. Of course, predicting the future is impossible. However one thing is clear, some stocks are better positioned than others to weather a market downturn. As we wait for the future to reveal itself, here are three stocks sure to weather a coming market crash should one occur.
Berkshire Hathaway (BRK.A) (BRK.B)
Berkshire Hathaway (NYSE:BRK.A/NYSE:BRK.B) is operating from a position of strength right now. Shares in the holding company are currently trading near an all-time high. Berkshire has outperformed the benchmark Standards and Practices (S&P) 500 index not only this year, but throughout the past five and 10 year periods as well. This is likely to make Buffett very happy as he has said repeatedly throughout the years that investors should buy an S&P 500 index fund if Berkshire is not able to beat the benchmark.
Berkshire’s stock is shining right now as the overall market largely moves sideways. This is due to a combination of factors that include strong financial results and a massive cash pile that currently stands at nearly $150 billion. Berkshire is an extremely diversified business with holdings ranging from railroads to insurers and restaurants. Both factors position the company and its stock to weather any economic recession or market crash.
Trading near an all-time high and standing tall right now is discount retailer Walmart (NYSE:WMT). Many retailers reported dreadful second-quarter financial results. Retailers are crumbling under the weight of declining sales, bloated inventories, and in-store thefts. However, Walmart has managed to buck the trend. Consumers continue to flock to its stores as they hunt for bargains in the current high-inflation environment that has interest rates sitting at a 22-year high.
Walmart reported strong Q2 financial results and raised its full-year guidance, which has led the company’s stock to rise 15% year to date and test record highs. The big box retailer said its e-commerce sales increased 24% from a year earlier in Q2 while its same-store sales rose 6.4%. Walmart’s sales are likely to strengthen in the event of hard times or a market crash. Furthermore, the company benefits from the fact that it’s now the largest grocery retailer in America. This is due to consumers seeking out cheaper food prices at its stores.
Food and beverage company PepsiCo (NASDQ:PEP) sells the kinds of products that stick with consumers and lead to steady earnings growth and share price appreciation. The maker of Lay’s Potato Chips, Quaker Oatmeal and Gatorade is likely to hold up well in the event of a market crash and even a recession. Consumers love its products enough that it gives PepsiCo pricing power. This is the ability to raise prices without losing customers. Many of its items are also discounted at places such as Walmart.
These facts have led PepsiCo to report steady earnings growth that has helped it weather the ups and downs of the market. The share price has gained 75% since the Covid-19 crash in March 2020, including a 7% gain throughout the last 12 months. It also pays shareholders a nice dividend of $1.26 per share each quarter for a yield of 2.79%. The company has also increased its dividend for 50 consecutive years, a fact that is likely to keep investors holding the stock. In the event of a market crash, PEP stock is likely to still be standing.
On the date of publication, Joel Baglole 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.