2 Stocks to Buy if the Market Crashes in 2022

Growth investors have endured significant market volatility in recent months, and the macroeconomic environment suggests that things may get worse before they get better. The omicron variant of the coronavirus threatens to throw a wrench into global supply chains, while the Federal Reserve is expected to raise interest rates three times this year to curb rampant inflation. Similarly, bond yields are creeping higher, tempting many investors to move wealth into safe-haven assets.

Collectively, those headwinds have translated into turbulence -- and anytime there is turbulence in the market, people start to worry about a market crash. Unfortunately, no one knows the future, so it's impossible to know when the next big downturn will occur. But I do know the past, and every past market crash has been a buying opportunity.

For that reason, I keep a small cash position in my portfolio. That way I have capital to deploy whenever the next downturn rolls around. And right now, Amazon (AMZN -1.64%) and Salesforce.com (CRM -0.18%) are at the top of my watchlist. Here's why.

Image source: Getty Images.

1. Amazon

The Amazon brand has become synonymous with e-commerce, and for good reason. Its online marketplace receives roughly 5.2 billion visits per month, triple that of the next closest competitor. And in terms of U.S. e-commerce sales, Amazon is expected to capture 41% market share in 2021, while second-place Walmart will take 6.6%, according to eMarketer.

Even more impressive, Amazon has established a strong competitive position in two other high-growth industries. Amazon Web Services is the most popular cloud service provider in the world, taking 32% market share in the third quarter, while second-place Microsoft held 21%. Similarly, Amazon ranks third in the U.S. digital ad market, and the company is expected to take 11.6% market share this year. But eMarketer's forecast puts that figure at 14.6% by 2023.

Put simply, Amazon has achieved a level of success that all companies aspire to but few ever realize. And that has translated into strong top-line growth.

Source: YCharts. TTM = trailing-12-months. CAGR = compound annual growth rate.

In 1997, founder Jeff Bezos penned his first letter to shareholders, highlighting the company's intention to "obsess over customers." More than two decades later, Amazon is still using the same playbook. It has invested billions to build out an extensive fulfillment and logistics network, which helps the company control costs, simplify shipping for sellers, and provide a great experience for buyers.

As a caveat, during the recent earnings call, CEO Andy Jassy noted that Amazon's fulfillment network has nearly doubled in size since the beginning of the pandemic, and those investments have weighed heavily on the bottom line. In fact, Amazon generated negative free cash flow of $2.3 billion over the last 12 months. And management said expenses could rise in the near term as the company continues to grow its shipping business.

However, that short-term pain should be a long-term tailwind, further reinforcing Amazon's value to buyers and sellers. Additionally, cloud computing and digital advertising are both high-margin businesses, especially compared to retail. As Amazon continues to grow within those industries, the company should become increasingly profitable.

2. Salesforce

Salesforce specializes in customer relationship management (CRM) services. Its portfolio includes a suite of software tools for sales, customer service, marketing, and commerce, helping organizations provide a top-notch customer experience across every department. The platform also includes tools for artificial intelligence, automation, and analytics, all of which enhance employee productivity. As a whole, Salesforce helps its clients build and maintain long-lasting relationships with their own customers.

Since it was founded in 1999, Salesforce has parlayed its first-mover's status into a substantial competitive advantage. The company currently ranks No. 1 with 23.9% market share in the CRM industry, and research company Gartner has recognized Salesforce as the leader in sales force automation and multichannel marketing. Not surprisingly, those accolades have come alongside strong demand and an impressive financial performance.

Today, Salesforce serves over 150,000 customers, and the company has grown its top line rapidly over the last three years.

Source: YCharts. TTM = trailing-12-months. CAGR = compound annual growth rate. Note: Q3 2022 ended Oct. 31, 2021.

Over the same time period, free cash flow has grown even more quickly, surging 115% -- or 29% on an annualized basis -- suggesting that the company is becoming more profitable over time. That bodes well for shareholders.

Looking ahead, Salesforce expects its market opportunity to reach $248 billion by 2025, leaving plenty of room for growth. To that end, Salesforce utterly dominates the CRM industry, a fact that should drive demand in the coming years as more organizations implement digital transformation initiatives. That's why this stock looks like a smart long-term investment, especially if its price is cut down by a market crash.