It's only a matter of when, not if, the stock market will crash again. Ignoring for the moment the dramatic plunge that occurred in the first quarter of 2020 at the onset of the coronavirus pandemic, the stock market has been on an incredible years-long tear.
Since the end of the Great Recession in 2009, the benchmark S&P 500 has more than quadrupled in value, turning a $10,000 investment into one worth some $42,000.
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Yet market swoons are a natural outgrowth of the normal business and investment cycle, and betting on exactly when one will happen is a fool's errand. But smart investors realize it's best to prepare for the eventuality because markets do dip and patience is needed for them to recover.
Even after the broad market index's collapse last year when it lost a third of its value in just about a month's time, the index has more than doubled.
Another double-digit correction is going to occur, meaning the likelihood of significant downside in the S&P 500 exists. Don't worry, though. These events are not a problem if you're invested in the right companies. When the next stock market crash or correction occurs, here are two stocks you'll want to buy.
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Chipotle Mexican Grill
Fast casual restaurant chain Chipotle Mexican Grill (CMG 0.22%) proved itself a standout during the pandemic because its business model was already takeout-friendly. The closing of its dining rooms didn't have the same impact as it had on other restaurants that did not have an established and robust off-premise business.
Yet it continues to shine afterward as well because of its digital infrastructure that allows customers to order on the website or via its mobile app for pick-up and delivery at nearby locations. Established only three years ago, Chipotle's digital orders now account for 42.8% of all sales.
And the transition to drive-thru orders at its popular Chipotlanes also continues driving sales, margins, and returns. Of the 41 new restaurants it opened in the third quarter, 36 had a drive-thru, and of the 200 new restaurants it will open this year, 75% will have one.
CEO Brian Niccol thinks Chipotle can expand its footprint to have as many as 6,000 locations in North America with average unit volumes of $3 million. That translates into $18 billion in revenue, or two and a half times more than it's currently taking in, without including the potential for international growth.
Trading at 50 times next year's earnings estimates, Chipotle Mexican Grill has already priced the opportunity into its stock, making a pullback during a market crash an excellent time to swoop in and buy this premiere restaurant stock.
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Netflix
It turns out that in good times and bad, consumers turn to Netflix (NFLX -0.90%) for comfort. Despite all of Wall Street's doubts and the rise of competing streaming services, Netflix has grown revenue for eight consecutive years at a better than 20% annual rate.
It will be hard to maintain that sort of momentum, as it's not easy to expand at that pace when you have nearly $29 billion in annual revenue. Yet management remains confident in its ability to keep growing nonetheless because of its unique content library, which includes big hits such as Tiger King -- a popular choice during the start of the pandemic lockdowns -- or more recently, Squid Game. Because the latter became such as popular culture icon, Netflix is capitalizing on it with retail merchandise, which further pads its profits.
Certainly such successes are one-off victories, but the collective power of Netflix's library has allowed it to attract more than 213 million subscribers worldwide. That's given it the ability to spend some $17 billion on new content acquisition. Obviously, it's going to be a slower-growth environment compared to when consumers were locked down in their homes, but Netflix's continued growth indicates people are keeping their subscriptions despite having more out-of-home entertainment activities to choose from.
Another stock sporting a premium price tag, Netflix could easily see its share price swoon alongside the market, making a market crash an opportune time to buy a strong household name at an attractive price.
