While it's the best wealth-building tool people have at their disposal, the stock market is a volatile beast. Corrections, which are sell-offs of at least 10% for the broader market, are not uncommon. In fact, one has happened in 29 of the past 50 years, and one usually occurs every 19 months on average. Buying high-quality businesses and owning them for the long term is a solid strategy for dealing with the certainty that there will be uncertainty. 

With that in mind, when the next market crash does happen, these three outstanding stocks would be good additions to help boost your investment portfolio. 

Person looking at a falling stock chart on tablet.

Image source: Getty Images.

1. Five Below

With 1,121 stores in 39 states as of July 31, Five Below (FIVE 2.06%) is one of the biggest discount retailers in the U.S. Catering primarily to teens, tweens (ages 10 to 13), and their parents, the company offers a wide variety of items from apparel and electronics to beauty products and arts and crafts. This $11 billion enterprise saw its sales surge 55% and earnings per share (EPS) jump 125% in the second quarter compared to the same period in 2019. 

Five Below's stores are colorful and vibrant shopping destinations, averaging 9,000 square feet in size and over $2 million in annual sales volume. Each location costs $300,000 to build and generates $450,000 in four-wall earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first year, a return on investment of 150%. With these stellar unit economics, it's no wonder the leadership team has been aggressively opening up more stores, including 101 net new locations just in the first two quarters of this fiscal year. 

Management believes that the company can one day have 2,500 stores in the U.S., which would be more than double the current footprint. This strategy has worked extremely well up to this point, and the stock price has followed, up more than seven-fold over the past decade. Expect Five Below to continue executing on its expansion plan in the years ahead. 

2. Home Depot

Home Depot (HD -0.74%), the largest home-improvement retailer by sales, has proven that its business model can thrive no matter what economic situation we're in. Revenue growth exceeded 23% in four straight quarters before reaching a record $41.1 billion in Q2 2021. During the pandemic, people spent more time than ever before inside, and this led to a surge in spending on home improvements. 

Home Depot prides itself on providing a seamless omnichannel shopping experience, utilizing its nearly 2,300 locations as hubs to get the right supplies, tools, and equipment to customers when they need them. In the most recent quarter, 55% of online orders were fulfilled at a store. What's more, management has plans to offer same- and next-day delivery to 90% of the U.S. population sometime in 2022. Customers' urgency of need, coupled with the fact that Home Depot sells big and bulky products, is why e-commerce juggernaut Amazon hasn't been a concern in the home-improvement retail space. 

Looking ahead, the company will continue to focus on bolstering its position with professional (or Pro) customers, contractors who help people tackle larger and more complex renovation projects. Representing 45% of total sales, this group spends much more than the average do-it-yourself (DIY) customer. As a result, Home Depot's return on invested capital of 44.7% and sales per square foot of $663 are both outstanding. 

Investors have the opportunity to scoop up Home Depot shares today at a cheaper price-to-earnings ratio (26) than the S&P 500's (29). 

3. Netflix

As the leading streaming company, Netflix (NFLX -1.51%) is a stock you should consider loading up on if there's a market crash. The business has consistently increased sales by more than 20% for eight straight years. And for 2021, management is forecasting just under $30 billion in revenue and a 20% operating margin. Even more exciting is that Netflix is projected to start generating positive free cash flow starting next year, something shareholders have long been waiting for. 

The company's first-mover advantage is why it now has more than 213 million subscribers worldwide and can spend $17 billion in cash on content this year alone. Even with the bevy of streaming options consumers have at their fingertips today, Netflix still shines thanks to its award-winning and popular hit shows and movies. And adding mobile gaming to the subscription offering should help to attract more customers as well as drive higher levels of engagement over time.  

During the most recent quarter, 98% of new members came from outside the U.S. and Canada, as these mature markets become more and more saturated. Therefore, expect international growth to propel Netflix in the years ahead. With local content production currently taking place in 45 countries and the proven successes of foreign series like Squid Game and La Casa de Papel, the business is fulfilling its ambition of becoming a global media empire. The world is on its way to being dominated by streaming entertainment, and Netflix remains at the forefront of this shift. 

Have your watchlist ready

Investors can't predict when the next market crash will happen, but they can prepare by having a watch list of companies ready to be purchased should the opportunity present itself. Five Below, Home Depot, and Netflix make the cut.