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Spring Market Correction: Where to Invest $1,000 Right Now

By Rich Duprey - May 23, 2021 at 7:07AM

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These two stocks have proved they have what it takes to withstand a downdraft.

The stock market has been on an incredible run for the past 14 months, rising about 80% in that time. That's not surprising coming out of the pandemic, but after peaking earlier this month, stocks have been heading lower.

Greater volatility could signal we are poised for a spring market correction, and if you have $1,000 to invest you may be leery about putting it to work for you in the stock market. But that just means you need to be more careful about where you invest. The two stocks below should be considered for the next stock market crash.

Concerned couple speaking with advisor

Image source: Getty Images.

1. Walmart

Walmart's (WMT 0.97%) first-quarter earnings report highlights its retail dominance. Not only is its physical presence overwhelming, but its e-commerce business continues to drive its expansion. Online sales grew another 37% compared to the year-ago first quarter, which captured just the start of the wave of pandemic-driven shopping.

It will now be facing tougher comparables because it was deemed an essential business and allowed to operate while its specialty retail competitors were forced to close. But its rivals are much weaker financially as a result of the government closing them down, while Walmart is flush with cash, having $22.8 billion sitting in the bank.

Walmart is worried it is losing ground to Amazon.com (AMZN -0.30%), but the reports that Amazon will be bigger than Walmart within a few years are skewed because they're counting all of the e-commerce giant's third-party sellers in the mix, while Walmart is largely a solo operation.

Its grocery sales did fall year over year in the first quarter, but the panic buying the pandemic launched made a decline all but inevitable. Walmart still owns an estimated quarter of the grocery market and had $341 billion in grocery sales last year. Second-place Kroger, the largest pure-play supermarket, is a distant second with about a 10% share and some $122 billion in 2020 sales.

A spring market correction will not likely faze this retail giant.

2. Apple

Once again Apple (AAPL 0.18%) proved the naysayers wrong, absolutely crushing Wall Street estimates on the strength of sales of the iPhone 12, iPad, and Mac computers. 

Analysts had said demand for iPhones was waning ahead of the earnings report, but Apple reported sales surged 66% in the quarter. The upgrade cycle provided a tremendous tailwind for the tech giant, but analysts are saying now is when demand will fall off. Wall Street has a penchant for always thinking consumers have had their fill of Apple products, and Apple continuously proves them wrong.

Yet demand was at record levels during the period, fueling double-digit growth across all categories in all of its geographic segments. CFO Luca Maestri said consumers were "driving our installed base of active devices to an all-time high." Apple, it seems, has perfected its new product launches to coincide with the need for upgrades fueling supercycle trends that continuously boost sales.

Because Apple has also developed its proprietary M1 chip, which reduces its reliance upon Intel, it has also avoided many of the delays and disruptions that are plaguing its competitors due to the industry chip shortage. 

iPad sales were up 79% this past quarter, and the latest versions with the M1 are likely going on sale this summer, which will undoubtedly fuel further gains and pad the near-$8 billion in sales it just made.

Apple also pays investors a very modest dividend that currently yields 0.7%. That's not going to attract very many income-seeking investors, but any decline in its stock price from a market downdraft can be at least partially ameliorated by the payout.

With over $38.4 billion in cash sitting in the bank, the dividend is safe and otherwise adds to the rationale for parking your $1,000 in its stock.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Apple. The Motley Fool recommends Intel and recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $57.50 calls on Intel, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, short January 2023 $57.50 puts on Intel, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$169.55 (0.18%) $0.31
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$142.25 (-0.30%) $0.43
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
WMT
$129.83 (0.97%) $1.25
Intel Corporation Stock Quote
Intel Corporation
INTC
$35.94 (1.61%) $0.57
The Kroger Co. Stock Quote
The Kroger Co.
KR
$47.40 (1.30%) $0.61

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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