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3 Stocks That Won't Flinch When the Inevitable Market Crash Comes

By Jeremy Bowman - Mar 4, 2021 at 5:47AM

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These winners are hiding in plain sight.

Last week was a reminder to investors that the blockbuster gains of the last year could easily disappear.

All it took was a modest increase in Treasury yields to send high-growth tech stocks into a tailspin: The Nasdaq lost 3% on Feb. 25, and fell nearly 10% in the span of a week, following its intraday record on Feb. 16.

A man standing on a cliff overlooking the ocean

Image source: Getty Images.

With the coronavirus vaccine rollout accelerating and hopes for economic recovery increasing, we're likely to see similar turbulence in the coming months. Given the market's lofty valuation, we could easily witness a larger pullback, especially as interest rates are expected to rise over the next year, beckoning a rotation into bonds and a devaluation of growth stocks.

If you're feeling jittery about the prospects for some of the growth-stock winners that have rallied into the stratosphere over the last year, you can read below about three stocks that are rock-solid, long-term winners no matter what the market does.

The Magic Kingdom at Disney World

Image source: Disney.

1. Walt Disney

It's hard to find a stock more deserving of a place in any portfolio than Walt Disney (DIS -2.30%). The company offers growth through its streaming juggernaut Disney+, the safety of an unrivaled trove of intellectual property that's been a part of Americana for generations, and (in non-pandemic times) reliable income from its dividend.

Disney stock may be trading near all-time highs, but that price tag is warranted: The breakout growth from its streaming services has caused Wall Street to value it more like a growth stock than the legacy entertainment company that it was before the launch of Disney+. That service has attracted nearly 100 million subscribers in little more than a year -- unprecedented growth for a streaming launch. Additionally, the company is likely to see record demand at its theme parks and resorts once the pandemic is over and it's safe to travel again. Attendance at its parks has already started recovering, and that will accelerate as vaccines are distributed.

In other words, with Disney, investors get a rare combination: a fast-growing digital component, and a business set to get strong tailwinds from the economic reopening. The company would benefit from an accelerated, successful reopening, making it resistant to any upcoming pullback in the market.

A laughing barista in a Starbucks cafe

Image source: Starbucks.

2. Starbucks

Java giant Starbucks (SBUX -0.06%) was as poorly positioned for the pandemic as most companies. The cafe chain relies on customers visiting its stores every day to buy coffee or a snack, often while commuting to work or school -- just the kind of discretionary purchases that disappear during a crisis.

Starbucks should have gotten pummeled by the pandemic. But while its sales did plunge in the early days when lockdowns were in effect, the cafe chain has made an impressive recovery, thanks to its drive-thru locations, Mobile Order & Pay program, and adapting stores to the pandemic by offering curbside pickup as well as delivery via Uber Eats.

As a result, Starbucks has nearly recovered all of its lost sales. Comparable sales declined by just 5% globally in the U.S. in its most recent quarter, even as much of the world was still reeling from the pandemic, with daily new cases rising through the end of the year. For fiscal 2021, which started in October 2020, Starbucks expects comparable-sales growth of 18% to 23%, recouping much of last year's sales. The company should also be able to gain significant market share from independent coffee shops and other competitors that lack the tech infrastructure, drive-thru locations, and other assets to help them survive the pandemic, so it should have an advantage as the economy reopens.

With the tailwinds Starbucks will get from the end of the pandemic, it will be able to shrug off any broader market sell-off that happens over the next year.

A Walmart truck on the highway

Image source: Walmart.

3. Walmart

If you're looking for a stable stock, Walmart (WMT -0.96%) certainly fits the bill. The company is the world's largest retailer, and largest company by revenue. It has massive economies of scale, a reputation for low prices, and stores within ten miles of 90% of the U.S. population. Walmart is also a Dividend Aristocrat, having raised its dividend every year for nearly 50 years.

However, the company is becoming more than a stodgy retailer. Its investments in e-commerce have neutralized the threat from Amazon, and made a competitive advantage out of its grocery business, as it now offers pickup and delivery from more than 3,000 stores. Its U.S. e-commerce business has grown by a compound annual rate of around 40% over the last five years, and it's now the No. 2 online retailer in the country.

Now Walmart is moving beyond retail. It's investing in healthcare, with health clinics inside stores and its own health insurance brokerage, and fintech, with a start-up it just launched with the help of Ribbit Capital, a backer of Robinhood and Coinbase. Details on the new fintech business are thin, but the retailer just poached two top consumer bankers from Goldman Sachs to run the business, a promising sign.

With those moves and its majority ownership of Flipkart, India's biggest e-commerce company, Walmart offers a lot more growth potential than its stock's price-to-earnings ratio of 24 would seem to indicate. That earnings multiple is steeply discounted compared to the S&P 500.

Like Disney and Starbucks, Walmart should have no problem rebuffing any volatility over the coming months.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$117.93 (-0.96%) $-1.14
The Walt Disney Company Stock Quote
The Walt Disney Company
$100.77 (-2.30%) $-2.37
Starbucks Corporation Stock Quote
Starbucks Corporation
$71.89 (-0.06%) $0.04

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