Will the stock market soon crash again as it did earlier this year? Or is the recent pullback only a temporary pause in an uptrend that will keep going for a long time to come? The correct answer: Nobody knows.
There are some reasons to be pessimistic. Stock valuations are frothy. Unemployment remains very high. The possibility of a resurgence in COVID-19 cases combined with a severe flu season is real. But there are also reasons to be optimistic, with unemployment levels trending down and significant progress on coronavirus vaccines and therapies.
The best course for investors to take with the overall market uncertainty is to find stocks of companies that should perform well no matter what happens next. Here are three incredibly strong stocks to buy that should thrive even if the stock market crashes again.
1. Bristol Myers Squibb
Any impact from the COVID-19 pandemic on Bristol Myers Squibb's (NYSE:BMY) sales has mainly been only a matter of timing. The big drugmaker's revenue received a boost in Q1 due to pandemic-related inventory stocking and saw a negative impact in Q2 as a result of this stocking. But BMS CEO Giovanni Caforio said in the company's Q2 conference call that "underlying dynamics remain very positive."
Those underlying dynamics are likely to remain very positive for a long time to come, regardless of any stock market turbulence. BMS claims three blockbuster products that generated double-digit percentage sales growth in the first half of 2020 -- blood cancer drugs Revlimid and Pomalyst/Imnovid, plus blood thinner Eliquis. The company also has four other blockbusters that delivered single-digit-percentage sales growth.
BMS' lineup includes several rising stars, as well. The company has great expectations for Reblozyl in treating anemia in patients with blood disorders, and for Zeposia in treating recurring and relapsed multiple sclerosis. In addition, recent Food and Drug Administration (FDA) approvals for Opdivo could enable the blockbuster cancer immunotherapy to resume its solid growth, achieved in the past.
Wall Street analysts project that BMS will grow its earnings by an average of more than 18% over the next five years, thanks to its current products and pipeline potential. With the company's dividend, which currently yields 3%, added to this growth, this big pharma stock should be a long-term winner, even if there's another market meltdown.
2. Dollar General
Many retailers have struggled this year with the lockdowns related to the coronavirus outbreak. Not Dollar General (NYSE:DG). Its business has boomed.
There are three main reasons behind Dollar General's strong performance in the midst of challenging times. First, the company sells products that people need, such as consumer staples. Second, as a discount retailer, Dollar General's prices are even more attractive to customers when the economy is struggling. Third, the company's stores are conveniently located -- there's a Dollar General store within five miles of more than 75% of the U.S. population.
But can Dollar General deliver solid results when times are good? Absolutely. Its shares have soared more than 600% over the last 10 years with a strong economy, nearly tripling the performance of the S&P 500 index.
The company is expanding initiatives such as pickup services and DG Fresh (self-distribution of frozen and refrigerated products). These moves should pave the way for the 14% average annual earnings growth that analysts expect over the next five years.
3. Vertex Pharmaceuticals
Like Bristol Myers Squibb, Vertex Pharmaceuticals (NASDAQ:VRTX) develops and sells prescription drugs that patients absolutely need no matter what's happening with the economy or the stock market. But Vertex also has an advantage that BMS doesn't: It enjoys a monopoly.
There are only four FDA-approved drugs that treat the underlying cause of rare genetic disease cystic fibrosis (CF). All of these drugs are made by Vertex. The biotech's newest CF drug, Trikafta/Kaftrio, raked in $918 million in sales in Q2, which was its second full quarter on the market. Look for even greater sales for the drug now that it has won European approval.
Vertex just might be on its way to extending its dominance beyond the CF market. The company's pipeline includes promising programs in phase 2 clinical studies that target genetic diseases alpha-1 antitrypsin deficiency and APOL1-mediated kidney diseases.
Analysts think that Vertex will deliver average annual earnings growth of close to 25% over the next five years, based largely on the strength of Trikafta/Kaftrio. If the biotech achieves its goal of expanding beyond CF, though, the second half of this decade could be even better than the first half.