Not every stock crashes with the rest of the market. Some corporations offer high margins of safety and can hold firmly during bad times. Putting some of your capital in these investments can reduce your portfolio’s losses from peak to trough.
However, a small number of stocks can actually perform well when the market crashes. It’s harder to find these stocks, and it’s possible for equities in this category to simply outperform the market. For instance, most assets get dragged down during market crashes, but some get dragged down less than others.
These stocks have the potential to do well even if the market crashes.
iShares Gold Trust (IAU)
The iShares Gold Trust (NYSEARCA:IAU) measures the price performance of gold. It’s more convenient than owning physical gold since you don’t have to worry about storage. IAU is also more liquid than the precious metal.
Gold is one of the most desirable resources and holds intrinsic value. Its value tends to increase during economic cycles with high inflation and low interest rates. IAU tends to perform well during economic uncertainty and has outperformed the stock market with a 77% gain over the past five years. It’s also off to a strong start and has gained 12% year-to-date (YTD).
The gold-tracking fund was flat in 2022. Many growth stocks collapsed that year due to red-hot inflation and interest rate hikes. If the economy goes through challenges again, the iShares Gold Trust should reward long-term investors.
Further, the fund is less correlated to stock market returns since it tracks a commodity. This fund can zig when other assets zag, and a 0.16 beta further encapsulates the lack of correlation between stock market returns and gains from the precious metal.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) has been selling consumer goods under iconic brands for almost 200 years. The corporation has endured many economic cycles while delivering impressive returns for long-term investors. The stock is up by 9% YTD and has rallied by 53% over the past five years.
Analysts believe the stock can march higher and have rated it as a moderate buy. The average price target suggests a 5% gain while the highest price target of $185 per share implies a 13.5% upside. The company doesn’t keep up with growth stocks during bullish markets but certainly holds its own during bearish economic cycles. Procter & Gamble stock only has a 0.43 beta which implies less volatility than most of the stock market.
The company reported 1% year-over-year (YOY) sales growth and 11% YOY diluted EPS growth in Q3 of 2024. These results are decent since investors know Procter & Gamble is a mature company rather than a growth firm. The corporation also has an impressive 133-year streak of paying dividends to investors. Procter & Gamble has raised its dividend for 67 consecutive years. That dividend history suggests PG can be resilient during an economic downturn.
Walmart (WMT)
Walmart (NYSE:WMT) offers many products and is the leading grocer by revenue in the U.S. People still have to buy various products during bad economic cycles and will shop at retailers that save them money. Walmart is well-known for its affordable products and can attract a wider customer pool when the economy slows down.
In fact, Walmart stock can still do well in bullish market cycles. The stock is up by 74% over the past five years. Also, it’s off to a good start with a 12% YTD gain. Analysts believe the stock can rally by an additional 11%. Walmart is rated as a strong buy among 28 analysts.
The retail giant continued to grow in multiple areas and offered a good Q4 of 2024 print for investors. Revenue increased by 5.7% YOY amid big gains for the company’s e-commerce and advertising segments. The firm crossed $100 billion in e-commerce sales for the first time in fiscal 2024.
Verizon (VZ)
Verizon (NYSE:VZ) isn’t the type of stock to outperform the stock market in the long term. However, the company has a large network of customers, and people aren’t as likely to cut down on their telecom services compared to other resources.
The stock has historically trailed the stock market but is up by 2% YTD amid rising demand for its broadband services. Revenue ticked up by 0.2% YOY while net income experienced a slight YOY decline. It trades at a 0.39 beta which suggests less volatility than the rest of the stock market.
Investors can pick better stocks, but a key strength of Verizon is its high yield. The asset’s 6.70% dividend yield makes it attractive for many dividend income investors who are looking toward retirement. The telecom firm continues to hike its dividend each year although growth has been slow in recent years. Verizon raised its dividend from $0.6525 per share to only $0.665 per share in 2023. That’s a 1.9% YOY increase.
Sprouts Farmers Market (SFM)
Phoenix-based Sprouts Farmers Market (NASDAQ:SFM) is an expanding grocery store chain. The company wrapped up 2023 with 407 stores in 23 states. Most of the company’s stores are located in the southern U.S.
The grocer will continue to see demand during economic slowdowns since people need to eat. While grocery stores are defensive stocks, Sprouts has been growing at an exceptional rate. Shares are up by 36% YTD, have gained 91% over the past year and more than tripled over the past five years. The stock trades at a 27 P/E ratio and has a $6.8 billion market cap.
Also, profit margins are steadily rising. The firm reported 8% YOY net sales growth in Q4 of 2023 while net income jumped by 11% YOY. Sprouts Farmers Market has a robust financial profile that is highlighted by the company’s $202 million cash and cash equivalents position. The company put some of its cash to use with $203 million worth of stock buybacks in 2023.
Deckers Outdoor (DECK)
People will still buy sneakers and athletic apparel during economic slowdowns. However, they may seem more affordable options like Deckers Outdoor (NYSE:DECK) compared to pricier brands like Nike (NYSE:NKE).
Deckers Outdoor is the corporation behind the HOKA and UGG product lines. It’s been gaining market share from top rivals while rewarding long-term investors. The stock is up by 22% YTD and has soared by 417% over the past five years.
Financial growth has supported the recent stock moves. The athletic apparel firm reported 16% YOY revenue growth in Q3 of FY24. EPS growth came in at 44% YOY as Deckers Outdoor continued to expand its profit margins.
Furthermore, DECK offers more affordable products than competitors with the most market share. The company has been gaining market share for several years and is prioritizing sustainable growth rather than rushing to the front of the line only to burn out shortly after. Deckers Outdoor has solid leadership that has delivered meaningful shareholder value.
Sysco (SYY)
Sysco (NYSE:SYY) is involved with the distribution and marketing of food products. It’s not going to outperform the stock market anytime soon as it’s only up by 6% over the past five years. The YTD and 1-year windows don’t offer much optimism either as the stock has been roughly flat since the start of the year.
However, Sysco is the type of stock that stays flat when the rest of the stock market is in free fall. The stock only dropped by roughly 3% in 2022, a year that saw major indices shed a lot of value. Additionally, the stock offers a 2.72% yield. Dividend growth has been minimal, as the company only hiked its quarterly dividend from $0.50 per share to $0.51 per share in 2024. That’s a 2% YOY increase.
Financial growth remains an area of concern, yet the company is reliable. It’s important not to think of this company as a growth stock since revenue only increased by 2.7% YOY in Q3 of 2024. EPS inched up by 1.2% from $0.84 per share to $0.85 per share.
On this date of publication, Marc Guberti held a long position in DECK. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
