There's a stock market crash in your future. A recent Bankrate survey found an astonishing 70% of Wall Street analysts think a correction is coming -- and sooner than you may think. They say it could happen within days or up to six months in the future.
But when you think about it, a market crash probably shouldn't be so surprising. Stock market corrections happen, and quite regularly. Since the end of World War II, the benchmark S&P 500 has tumbled 10% or more 27 separate times. With rampant inflation at the highest it's been in 40 years, a Federal Reserve determined to raise interest rates to combat rising prices, and a stubborn supply-chain logjam, the potential for at least a correction, if not a recession, is high.
Yet that doesn't mean you should panic and sell all your stock. Perspective on market crashes is essential because bear markets don't last forever, or even very long actually. The Schwab Center for Financial Research says the average bear market has lasted only about 17 months, and 80% of corrections since 1974 have not turned into a bear market.
Being prepared and keeping some powder dry so you can move swiftly will help you realize outsized returns when a market crash comes. These two stocks are ones to buy when the markets move sharply lower.
1. Sturm, Ruger
One of the country's biggest firearms manufacturers, Sturm, Ruger (RGR -0.23%), is a prime candidate for your portfolio in a market downturn. During times of strife, unrest, and economic turmoil, consumers tend to buy firearms to ensure protection of themselves, their families, and their properties.
As the below chart shows, Ruger's stock performance has also been stellar during such periods. While past performance is no guarantee of future results, there is a certain logic behind it.
The pandemic and its aftermath of lockdowns, as well as a summer of protests and rioting, brought the entire gun industry out of a years-long slump as first-time gun buyers flocked to acquire a firearm. That torrid pace of growth has slowed, but demand is still elevated.
FBI background checks on gun buyers were down 6% in January 2022, according to adjusted data from the National Shooting Sports Foundation. Still, the month was only behind last year's record-breaking numbers and January 2016.
Sturm, Ruger's stock trades at just eight times trailing earnings, 11 times next year's estimates, and under 13 times the free cash flow it produces. It also pays a dividend that's currently yielding 4.6% annually, though it fluctuates based on quarterly profits. While the gunmaker rarely trades at nosebleed valuations, it's a sporting goods stock that's cheap with a solid business model, making it one you want to buy for the coming crash.
2. Genuine Parts
Perhaps best known as the name behind the chain of NAPA Auto Parts retail stores, Genuine Parts (GPC 0.49%) is the premier name in aftermarket auto parts -- and there may not be a better time for its stock to shine.
The global supply chain crisis has created a well-publicized shortage of computer chips that just doesn't seem to be going away. That has caused auto sales to fall since carmakers can't put their vehicles on dealer lots, leading to soaring new car prices. In turn, that's making used cars more valuable, causing their prices to rise too. All of this means consumers are going to be holding on to their existing cars longer.
The average age of cars on the road is over 12 years old now, almost three years older than it was two decades ago. Cars are likely to get older still, meaning maintaining them will be essential, and a market crash would likely mean consumers will hold onto their jalopies even longer.
Genuine Parts is due to report earnings soon, but sales rose 10% to $4.8 billion last quarter, and adjusted profits were a record $1.88 per share. It also pays a quarterly dividend, just as it has for nearly 100 years. Genuine Parts has consistently raised the payout for 66 consecutive years, making it a Dividend King.