Markets were crushed Thursday on signs of slowing growth in China and Germany and a gloomy economic outlook from the Federal Reserve, reported CNBC. In response, investors fled to the safety of the U.S. dollar and government bonds.
The U.S dollar climbed 1.36%, which pushed down U.S crude oil prices by more than 5%. Gold dropped nearly $50/ounce and European stocks fell 4% to a two-year low, "dragging an index of global equities to a one-year trough." This was all before 11 a.m.
Market volatility isn't going anywhere, and more cloudy days may still be ahead for the global economy.
So how can you prepare yourself for more market losses?
For ideas, we went back into time, and identified a list of stocks that outperformed the market during each of the last three big market downturns over the last decade (Oct. 1, 2007 to March 2, 2009, April 19, 2010 to June 28, 2010, and July 18, 2011 to the present).
In addition, all of these stocks appear to be undervalued, when comparing levered free cash flow to enterprise value.
Considering the track record of these companies during downturns, are they being underestimated by the market?
List sorted by each stock's average alpha relative to the S&P 500 during the three downturns over the last decade. (Click here to access free, interactive tools to analyze these ideas.)
1. Arch Capital Group
2. Meadowbrook Insurance Group
4. MKS Instruments
5. Fresh Del Monte Produce
Interactive chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Becca Lipman and Eben Esterhuizen do not own any of the shares mentioned above. Price data from Yahoo! Finance. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.