Finding market-beating stocks can be tough when the stock market is falling because, historically, the majority of stocks go in the same direction as the S&P 500. However, there are some stocks that do better than others, and our Motley Fool investors think that the next time the bear comes calling, investors in Amgen Inc. (NASDAQ:AMGN), Wal-Mart Stores (NYSE:WMT), and Johnson & Johnson (NYSE:JNJ) could come out ahead.

News can trump a down market

Todd Campbell (Amgen, Inc): The past doesn't guarantee the future, but sometimes, the past rhymes with it. If that's the case during the next market crash, owning Amgen, Inc. could be smart.

Money falls around a businessman sitting on the floor next to a piggy bank.


Amgen is one of the world's biggest biotechnology drugmakers. In addition to being one of the few dividend-paying stocks in its industry, it also has the distinction of significantly outperforming the S&P 500 during 2008, when the index fell 38%.

AMGN Year to Date Price Returns (Daily) Chart

AMGN Year-to-Date Price Returns (Daily) data by YCharts.

Amgen's outperformance then was due to its reporting successful trial data for its now approved osteoporosis drug, Prolia. It also got a boost when it won Food and Drug Administration (FDA) approval for a highly anticipated thrombocytopenia drug, Nplate.

Admittedly, it's anyone's guess if Amgen will report similarly good news the next time markets tumble, but it's got a lot going on in its pipeline that could provide a steady stream of news over the next couple of years that could boost its share price. Currently, it has a migraine drug, an osteoporosis drug, and a multiple myeloma drug approaching the finish line. It's also got a slate of biosimilars in development that could capture billions of dollars in biologics sales someday, if they're approved. Further out, over a dozen early-stage trials are underway to find the next big winner.

It also makes sense to own Amgen because it's in industry giant. It does over $20 billion in sales and it has about $38 billion in cash and investments. Lately, it's been boosting its dividend by 30% per year, and with a 2.6% dividend yield, it's a great stock to include in a dividend portfolio.

Count on low-priced retail to weather the storm

Dan Caplinger (Wal-Mart): Market crashes are scary because they often take stocks down even if there's no good fundamental reason for doing so. Yet there are a few stocks that investors look to for stability, even under the toughest of conditions. During the most recent market crash in 2008, Wal-Mart was one of the only winners from the financial crisis and Great Recession, and investors couldn't have asked for better performance.

The key to Wal-Mart's ability to weather crashes has everything to do with the cause of the plunge in 2008. When the economy is strong, consumers feel good about their economic circumstances, and they feel more comfortable spending money. That's generally good for most retailers, but for Wal-Mart, the big-box giant's emphasis on low prices on discount goods holds less appeal than shopping at higher-end luxury stores.

What the 2008 recession and market crash did was to show American shoppers that they needed Wal-Mart and its price focus. In the end, the retail giant fared much better than most of its competitors, largely because many customers moved down from higher-end stores in search of more-affordable options. The stock finished 2008 with a 20% gain, beating the S&P 500's return by more than 55 percentage points.

There's no guarantee that the next market crash will come with a recession, so Wal-Mart might not benefit from the same positive impact. The competitive landscape has also shifted, and Wal-Mart's benefit from expanding its grocery business could come with new risks in the near future. Yet with a history of solid performance even in tough markets, Wal-Mart has convinced many investors that it can thrive even in the next market crash.

Take good care of your portfolio

Demitri Kalogeropoulos (Johnson & Johnson): Healthcare titan Johnson & Johnson has lived through more than a few market slumps in its over 120 years of doing business. And yet these ups and downs don't get between income investors and their quarterly checks. In fact, with 55 consecutive annual payout raises, Johnson & Johnson boasts one of the longest-running dividends on the market today.

JNJ Dividend Chart

JNJ Dividend data by YCharts.

Shareholders can't bank on a perfect record of sales and earnings growth. After all, revenue has declined in two of the last 10 fiscal years.

Investors occasionally endure painful profit environments, too. The most recent was a two-year stretch that was marked by severe economic decline around the world, the patent expiration for two blockbuster drugs, and a costly product recall. "Our company was severely tested," Johnson & Johnson's CEO said in its 2011 annual report.

Yet the operation excelled through this period thanks, in part, to a well-diversified portfolio that gets 70% of its sales from products that are ranked No. 1 or No. 2 in their markets. Johnson & Johnson's aggressive focus on the future is another competitive strength that's nearly impossible for rivals to match. It plowed $7.5 billion into research-and-development spending in 2011, and the number rose to $9.1 billion last year, equivalent to 13% of sales.

The aggressive innovation pace ensures that about one-quarter of the company's revenue comes from products released over just the past five years. In that way, the owner of iconic healthcare brands like Band-Aid demonstrates that constant adaptation is the surest path to market-beating business results over the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.