The market downtrend started with a pullback in high-growth stocks, but it has spread to most industries and sectors in the market. Even some of the most rock-solid businesses in the world haven't been spared.
However, there is opportunity to be found in this market turbulence. Here are two of the most impressive companies in the world whose stocks are down by 23% and 48%, respectively, from the recent highs that look like excellent buys for patient long-term investors.
This stock was made for recessions
If I had to put all of my money into a single stock and hold it through a deep recession, it would be Berkshire Hathaway (BRK.A -0.46%) (BRK.B -0.74%). And it's not even close. To put it mildly, this is a business that was built for tough times.
We'll start with Berkshire's more than 60 subsidiary businesses, most of which sell things people need no matter what the economy is doing. GEICO will keep collecting auto insurance premiums, and Berkshire's utility businesses will keep receiving bill payments from customers, just to name a couple of examples. And there's also Berkshire's massive stock portfolio, much of which was hand-selected by Warren Buffett himself. In a nutshell, this is a diversified and recession-resistant portfolio of investments in a single stock.
However, the biggest reason Berkshire can thrive during tough times is that the company has tons of cash to take advantage of beaten-down investment opportunities. Even after spending over $50 billion in the stock market in the first quarter, Berkshire finished the second quarter with $106 billion in cash. Since Buffett took control of Berkshire, the S&P 500 has finished the year negative 11 times, and Berkshire has beaten the market in all but two of those. There's a good reason for that.
Trading at a five-year low, this company has a very bright future ahead
While it isn't quite as recession resistant as Berkshire, Walt Disney (DIS 0.08%) is about as close to a no-brainer as you can get at the current valuation. Disney stock is down by 44% in 2022 alone and is trading close to a five-year low, despite massive positive changes in the business since then.
For starters, Disney has some of the most valuable intellectual property and entertainment franchises in the world. Although the pandemic caused its business to take a temporary hit, it also showed its resilience. Disney's theme parks in the U.S. are as busy as ever, and just to name one example, at the Walt Disney World Resort in Florida, at least one theme park is completely booked every day for the rest of the month as I write this. Per-person spending at Disney theme parks is 40% higher than in the comparable pre-pandemic period. In short, Disney's theme parks, film studio, and other major aspects of the business are thriving.
In addition, the company's streaming platform has grown dramatically in just a few years. The Disney+ service launched in late 2019 and met its original five-year subscriber targets within its first year, reaching 138 million subscribers as of April. Between Disney+, Hulu, and ESPN+, Disney has added a multibillion-dollar stream of recurring revenue that wasn't there before the pandemic. And now you can buy the stock at the same price as when the theme parks weren't generating as much revenue and the core streaming platform didn't exist.
Great long-term plays despite near-term volatility
All three of these stocks are well-run businesses that should weather any economic storm relatively unscathed. However, that doesn't mean their stock prices will go up in a straight line from here. Nobody knows what they'll do over the coming weeks or months, but I'm quite confident that investors who buy at these levels and hold on will be happy they did. I own all three in my own retirement account and have no plans to sell a single share for the foreseeable future.
