Slipping markets don't always make for stress-free weekends, but they often provide great opportunities to buy top-shelf companies for the long haul. So we asked three of our analysts to pick one stock they would love to grab from the bargain bin if Mr. Market falls sharply. Read on to learn what they think.
Todd Campbell: Blue light specials aren't always great buys, but even best-in-breed companies can take it on the chin during market sell-offs. That's why I'll be eye-balling Gilead Sciences (NASDAQ:GILD) closely.
Gilead is the de facto Goliath in HIV treatment. The company recorded $9 billion in HIV drug sales last year and markets five separate products, which could hit billion dollar blockbuster sales status this year. The company's HIV franchise alone is a good reason to buy shares, but it's not the only reason.
A drug you've never heard of called Harvoni could quickly become the planet's top selling hepatitis C drug (and maybe the best-selling drug in the world). That's because Harvoni combines Gilead's mega blockbuster Sovaldi with another of its drugs -- ledipasvir -- in a combination therapy that cures up to 99% of patients and does away with side effect-laden peg interferon and ribavirin once and for all. How big could this opportunity be? Consider that 70,000 patients were treated with Sovaldi during the first six months of 2014, and that that resulted in sales of more than $5 billion. In the U.S. alone there are 3 million cases of chronic hepatitis C, and globally there are more than 120 million people diagnosed with the disease. That suggests a massive opportunity for the company.
George Budwell: Celgene Corporation (NASDAQ:CELG) is my "green eggs and ham stock". I like it at current prices, lower prices, and even at higher prices (up to a point, of course!). I like it pretty much at all prices, within reason.
As such, Celgene would be one of the first stocks I'd buy if the market crashed tomorrow. Why? As a Foolish investor, I am mainly concerned with a company's ability to generate growth over the long-term. Mr. Market can be an emotional creature that thrashes stock prices for reasons that have little to do with a company's underlying business. But strong top and bottom-line growth eventually shine through, even in the worst markets.
Turning to the specifics, Celgene's cancer drugs Abraxane and Revlimid have been helping to drive double-digit growth on the top-line lately, and the company expects its newest product, Otezla, to generate sales topping $1 billion within the next three years. All told, Celgene's pharma sales are on track to more than double within three to four years, its diluted EPS is expected to grow in excess of 26% on average for the next 5 years, and the company has some of the best management in biotech. That's the kind of solid business that will outlast a moody market.
Jordan Wathen: With the financial crisis still visible in the rear view mirror, the idea of buying bank stocks in a downturn sounds ludicrous. And for many bank stocks, it probably is.
But not all banks are created equal. Wells Fargo & Company (NYSE:WFC) stands above the rest as a bank I'd be buying, even if the market crashed tomorrow.
Time and time again, Wells Fargo has shown its ability to not only survive, but thrive in downturns. The company's diversified sources of earnings -- fees and interest -- allow it to survive the worst of recessions. In fact, roughly 82% of Wells Fargo's noninterest expenses are covered by fee income. It can afford to keep the lights on even if its loan book performs poorly, something few banks can do.
Wells Fargo has historically used crises to grow. During the financial crisis it used its competitors' weaknesses to acquire them cheaply, growing its asset base from $575 billion at the end of 2007 to $1.3 trillion by the end of 2008. Total assets are now near $1.6 trillion.
That's why Wells Fargo would be my blind buy in a market crash scenario.
Todd owns Gilead Sciences and Celgene. George and Jordan do not have positions in the companies mentioned. The Motley Fool recommends Celgene, Gilead Sciences, and Wells Fargo. The Motley Fool owns shares of Gilead Sciences and Wells Fargo. 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.