Bear markets may induce pessimism and fear, but they should instead be perceived as great opportunities to accumulate stocks of strong companies for the long haul. Both the Nasdaq Composite index and S&P 500 index are mired in a bear market as a combination of high inflation and interest rates act as a drag on earnings. You may be surprised to learn that some companies can continue to thrive through bear markets as they have a strong franchise and robust business model.
Preparing a list of companies you can scoop up each time the market dives is always useful. By monitoring the strength of these businesses and their consistency, you can pull the trigger without worry the next time valuations and share prices plummet. Ideally, these businesses should exhibit a good track record of steady growth, have a sturdy business model, and be able to hold their own through different economic conditions.
Here are four stocks that you can confidently buy during the next bear market.
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Crown Castle
Crown Castle (CCI -0.67%) is a real estate investment trust (REIT) with a portfolio of more than 40,000 communication towers. The REIT also owns around 115,000 small cells along with fiber solutions that position it well for the incoming 5G deployment wave. Crown Castle has been a bastion of stability, growing its dividends at a compound annual growth rate of 9% since 2016. The key to this lies in the REIT's stable long-term contract with its tenants, with a weighted average remaining contract term of seven years, along with embedded rental escalations.
The reliability of the REIT's dividends and its portfolio of stable, resilient assets makes it a perfect candidate for income-seeking investors. The explosion in data usage has propelled growth in wireless data demand in the last decade, and this trend is projected to continue growing at 25% per year through 2027. With denser networks needed soon as data consumption surges, Crown Castle is in a good position to lease out its assets at attractive rates and can continue to dole out steady dividends through good times and bad.
Chipotle Mexican Grill
When it comes to consistency in delivering financial results, not many restaurant chains can compare with Chipotle Mexican Grill (CMG 2.41%). The Mexican restaurant chain owned nearly 3,100 outlets as of Sept. 30 and has delivered a delicious set of results for investors even through the pandemic. Revenue for the company rose from $5.6 billion in 2019 to $7.5 billion in 2021, with net income surging from $350.1 million to $653 million over the same period. Chipotle has also generated consistent free cash flow in the three years while working on boosting its digital sales.
The food and beverage giant has continued its stellar track record this year. For the first nine months of 2022, revenue grew 15.5% year over year to $6.4 billion, while net income climbed 30% year over year to $675.4 million. Management expects to open between 255 and 285 new restaurants next year so that investors can look forward to continued growth for Chipotle.
Tapestry
Tapestry (TPR 1.68%) owns three iconic brands -- Coach, Stuart Weitzman, and Kate Spade -- distributed in around 70 countries through a network of 1,443 directly operated stores. The company's strong brand franchise has allowed it to post growth through the pandemic, with sales rising from $4.9 billion to $6.7 billion from fiscal 2020 to fiscal 2022 (ending July 2). Tapestry has turned its net loss of $652.1 million in fiscal 2020 to a net income of $856.3 million in fiscal 2022, showcasing a sharp turnaround for the luxury brands business. The first quarter of fiscal 2023 has seen Tapestry deliver record revenue of $1.5 billion, up 2% year over year. Earnings for the full year are expected to grow by mid-single digits year over year.
Tapestry announced its fiscal year 2025 growth strategy and financial targets during its recent Investor Day. The company expects to see its revenue grow by 6% to 7% per annum over the next three years to reach $8 billion, along with low- to mid-teens earnings growth per annum over the same period. Tapestry intends to execute this plan by forging lasting customer relationships, fostering an innovative culture, and introducing omnichannel experiences to attract and retain customers. Tapestry believes that the future remains bright as the personal premium goods market is projected to grow to $370 billion by fiscal 2025, providing ample room for the company to grow its top and bottom lines steadily.
Home Depot
Home Depot (HD 0.94%) is the world's largest home improvement retailer, with 2,300 stores scattered around the U.S. The company has steadily grown its sales and net income from 2019 through 2021, showcasing its resilience in the face of the pandemic. Sales rose from $110.2 billion to $151.2 billion, with net income rising from $11.2 billion to $16.4 billion over the same period. The home improvement chain also generates copious amounts of free cash flow exceeding $10 billion per year and has a great track record of paying out increasing dividends over more than two decades.
Home Depot's strong track record has continued in 2022. The company saw sales rise 5.3% year over year for the first nine months of 2022 to $121.6 billion, while net earnings increased 5.1% year over year to $13.7 billion. In line with prior years, the company's free cash flow remained strong at $7.8 billion for the first nine months of 2022, ensuring that it can continue to pay out higher dividends. Home Depot continues to open new stores, with its latest four stores to open in Mexico this month, bringing its store count there to 133.
