With the S&P 500 now up more than 600% from the long-term low reached nearly 13 years ago, it's not a stretch to say this bull market is more than a little long in the tooth. Even the short-term correction during the height of the pandemic was only a temporary adjustment followed by even more fervent exuberance.
With inflation starting to soar and interest rates set to rise for at least the next couple of years, the next long-feared bear market may finally be in the offing. But that's not to say you should get out of the market altogether. It just might be a bad time to be nestling into new truly long-term trades you may end up owning for a lifetime. There's never a bad time, however, to make a plan for what to buy as the bear market eases.
Here's a rundown of four proven long-term stock winners that could be temporarily driven down by a bear market, but have what it takes for a quick and firm recovery once that storm passes.
Image source: Getty Images.
1. Apple
Is it really any surprise Apple (AAPL -2.19%) -- the world's most profitable, most recognizable, and (usually) biggest company -- has earned a spot on a list of names to buy after any decent-size setback? Probably not.
Despite saturation and plenty of worthy competition for the world's most popular smartphone, the iPhone, Apple continues to find ways to get its flagship product in consumers' hands. Market researcher IDC estimates the company sold a record 90.1 million iPhones during the final quarter of last year following last October's unveiling of the iPhone 13. And after a brief cooling-off period in the first half of 2021, the third quarter's phone sales surged nearly 21% year over year.
Apple isn't resting, though. Knowing the smartphone market is going to peak sooner or later, it's been shifting its focus toward the monetization of its digital ecosystem: apps and content. It's firing on all cylinders on that front, too, with last quarter's digital services revenue growing 25% year over year to reach a record-breaking $18.3 billion. And there's still plenty of room for both businesses to continue growing.
2. Home Depot
Home Depot (HD -1.44%) isn't the sort of growth engine Apple is, and it's certainly not immune to the effects of a recession and a corresponding bear market. But it is in a business with some serious permanency.
There's never going to be a time when consumers won't need a place to live. And there's never going to be a time when those dwellings won't need to be built or repaired. Home Depot wins either way, even if the construction and repair business is temporarily stifled by economic turbulence.
It certainly bounced back firmly beginning in 2010, growing every year between then and 2019, according to data from Harvard University's Joint Center for Housing Studies.
But investors just might be underestimating how much construction, remodeling, and repair spending need to be done. The Census Bureau estimates that the population of the United States alone will swell from 323 million in 2016 to 355 million by 2030, en route to more than 400 million by 2060. They all have to live somewhere.
For perspective, the National Association of Realtors says the country needs another 5.5 million homes, a shortfall that's only going to worsen for the foreseeable future.
3. Nike
Even with fresh competition on all fronts, Nike (NKE 1.20%) is not only still standing, it's still thriving. After suffering a modest sales setback of 4% in fiscal 2020 (ending in May) due to the pandemic, the company came roaring back with 19% sales growth in fiscal 2021 to report record-breaking revenue of $44.5 billion.
That sort of resiliency is the result of decades' worth of dominance. Nike enjoys about twice as much market share as any of its nest-nearest competitors in any category of athletic wear in any market and has for a while. This superior scale means the company is able to spend enough money on marketing to keep it. And it's adapting as needed.
While once completely reliant on third-party retailers to peddle its products, Nike has smartly (and successfully) begun taking matters into its own hands to completely manage the shopping experience. Direct-to-consumer sales last quarter accounted for 38% of total revenue, improving 25% year over year. These sales are not only made online, but also through the company's roughly 1,000 stores peppered across the globe. The brand has also made a point of using apps to go beyond merely selling, by offering personalized training tools and exclusive content to members.
4. S&P Global
Finally, add S&P Global (SPGI -1.98%) to your list of names that are too overextended to buy right now, but won't be if and when a bear market upends stocks.
This is the same company behind well-known market indexes like the S&P 500. It's also affiliated with Dow Jones. Licensing its indexes, however, isn't the crux of its revenue.
S&P Global also manages a major equity research operation marketed as S&P Global Market Intelligence as well as simpler stock-rating and data platforms. There's surprisingly good money to be made in the business, and Standard & Poor's is very good at getting its hands on it. This fiscal year's projected 10% increase in sales should be accompanied by a 17% improvement in per-share earnings. Analysts expect revenue growth to cool to only 5% next year, though profits are still apt to improve a little more than 7% in 2022. Both years' forward progress will extend what's been an amazingly steady cadence of sales and earnings growth.
As with Home Depot and Nike, a recession-driven bear market is apt to crimp S&P Global's top and bottom lines; that was certainly the case back in 2008 when the subprime mortgage meltdown created a ripple effect that impacted most other aspects of the global economy. Any pullback in S&P Global shares will make a fair amount of sense.
This is an industry, however, that investors and institutions need, which is why you can count on a recovery from any drubbing prompted by a bear market.
