Despite high unemployment and a fraught economic climate, the stock market has fully recovered since bottoming out earlier this year. All three major U.S. market indexes, the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average, are up by more than 50%. But as history tells us, it's only a matter of time before we face another crash. Unexpected market corrections are regular events marked by at least a 10% decline in stock prices. But when they inevitably happen, dedicated long-term investors shouldn't jump to escape the market.

Watching your portfolio plunge will test your resolve. But it's essential for investors to remember that the market will recover after the next downturn. The market has recovered from every single downturn in its history. That's a resounding 38 market correction recoveries since 1950. Instead of panic-selling when stocks plunge, a dip can serve investors who know how to look for great investment opportunities at a discount. In that spirit, Bristol Myers Squibb (BMY 0.17%) is one pharma stock I believe will be a great pick when the market crashes again.

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Looking at Bristol Myers' lineup

During the second quarter, which ended on June 30, Bristol Myers' top line rang in at $10.1 billion, a 61% year-over-year increase.  The healthcare giant has benefitted from inflated revenue growth thanks to its November 2019 acquisition of Celgene, which cost $74 billion in a mix of cash and stock. Several pharmaceuticals that generate hundreds of millions in revenue every year were part of the Celgene package. Thus, Bristol Myers' revenue for the second quarter of the fiscal year 2019 isn't a great baseline for comparing its second-quarter revenue of its current fiscal year.

Bristol Myers' top performers this year include cancer drugs Revlimid and Opdivo, as well as an anticoagulant called Eliquis. Revlimid, a Celgene product, generated $2.9 billion in revenue, representing a 6% year over year increase on a pro forma basis. Eliquis brought in $2.2 billion in revenue, 6% higher than the prior-year quarter. And although Opdivo's revenue declined by 9% year-over-year to $1.7 billion, the drug is undergoing more than a dozen clinical trials for new treatment uses. All three of these drugs are projected to be among the top 10 best-selling in the world in 2024, according to the research firm Evaluate Pharma.  

Smiling pharmacist leaning on a counter in a pharmacy.

Image source: Getty Images.

Bristol Myers has other products it can count on, including cancer medicine Pomalyst, which generated $745 million in revenue during the second quarter, a 21% increase on a pro forma basis. Bristol Myers is also working to enrich a pipeline that can replenish the current lineup. The company expects six new product launches within the next two years, and estimates that these products will generate about $20 billion in revenue during the second half of the decade. In total, the company boasts more than 50 clinical compounds in development and has more than a dozen active phase 3 clinical trials. Investors can rest assured that Bristol Myers is constantly working to add revenue streams by developing new therapies.

The elephant in the room

Bristol Myers' latest balance sheet will probably scare off a few investors. The company significantly increased its debt level since acquiring Celgene last year, and by the recent quarter's close, Bristol Myers had roughly $55.5 billion in long-term liabilities. This is compared to $29.3 billion in total liabilities at the end of the previous second quarter. Naturally, no one wants to invest in a company that is drowning in debt, especially in the middle of an economic crisis with an uncertain end-date. Still, Bristol Myers generated $34.86 billion in revenue during the trailing-12-month period and has a respectable current ratio of roughly 1.5.

The current ratio is a measure of how well the company can take care of its short-term obligations, and it is typically considered "healthy" at 1.5 or higher. If the ratio, is too high, however, it might be an indication that a company is mismanaging or hoarding assets.  Bristol Myers' current ratio, which is current assets over current liabilities, shows that it is capable of handling its debt load and keeping operations up and running. During the company's second quarter earnings call, CEO David Elkins pledged to bring down Bristol Myers' debt-to-EBITDA -- a measure of how well a company can cover its debt -- from 3.8 to less than 1.5 by the end of 2023. It will be important for investors to monitor Bristol Myers' debt situation, but it shouldn't scare them away altogether.

The key takeaways

Despite its poor performance on the market year-to-date and its high debt level, I believe that Bristol Myers has what it takes to deliver reliable financial performances and turn things around. The company is expanding its lineup of already successful pharmaceuticals and is well-positioned to pay its debts. Its acquisition of Celgene was expensive, but gave Bristol Myers access to star products like Revlimid and Pomalyst. As a bonus, consider that the company offers a dividend yield of 2.78% compared to an average of 1.8% for S&P 500 companies. The company's cash payout ratio is a conservative 28.14%, which shows that it can afford dividend increases. In other words, in addition to its growth potential, Bristol Myers is an attractive stock for dividend-seeking investors. With these qualities in mind, I believe it'd be wise to add shares of this pharma stock to your portfolio in the next bear market.