It may not be this week, this month, or even this year, but history tells us that stock market crashes are far more common than investors realize.
Data from market analysis firm Yardeni Research show that they followed broadly S&P 500 has undergone 38 crashes or corrections of at least 10% since the beginning of 1950. It operates on average a double-digit downward pull every 1.87 years. And it just so happens that the S & P 500’s Shiller relationship between price and earnings is higher now than it has been for almost two decades.
However, long-term investors do not fear crashes. Rather, they see them as opportunities. Think about this for a moment: Every last of the aforementioned 38 crashes and fixes was eventually wiped out by a bullmarked rally. In many cases, it took a few weeks or months to recover what was lost. As long as you have time on your side, your chances of making money in the market go up.
The $ 64,000 question is: What should you buy if a stock price crash occurs?
Although the growth stocks are significantly better than value shares Since the end of the Great Recession – historically low lending rates have allowed fast-lending companies to borrow at low interest rates – the tables may turn during the next crash. This is because securities have a history of easily surpassing growth stocks in the early stages of an economic recovery.
Eventually, another stock price crash will carry its head; and when that happens, you should consider buying the following four securities.
Health stocks is often a great place to put your money at work during a market crash. Since we cannot choose when we get sick or what disorder or disorders we develop, health care companies tend to be busy, no matter how well or poorly the U.S. economy performs. This is a good reason to sink your teeth into the pharmacy chain CVS health (NYSE: CVS).
Unlike its great peers, CVS have thought outside the box. Instead of expanding horizontally, CVS chose to grow vertically with the acquisition of healthcare provider Aetna in 2018. This combination still provides additional cost synergies and it is expected to improve CVS Health’s organic growth rate. In addition, the binding of CVS and Aetna creates an incentive for Aetna’s more than 20 million members to remain within the CVS ecosystem of products and services.
In addition to this game-changing acquisition, CVS Health’s most exciting venture may just be its HealthHUB health clinics rollout. In the coming years, the company plans to open about 1,500 of these clinics in select stores across the country. The goal is to attract patients with chronic illness and get these people in touch with specialists who can treat their disorder (s). For CVS, it is about getting repeated traffic inside the doors.
Currently valued at less than 10 times Wall Street’s expected earnings per share. Stock in 2021, CVS Health would be perfect for good hunters.
Remember that when the next stock market crash hits, it can be a smart and profitable idea to look abroad. One value stock to consider buying is Russia’s Mobile TeleSystems (NYSE: MBT).
Mobile TeleSystems, or MTS, is one of Russia’s largest wireless telecommunications companies. In Russia, wireless saturation rates are extremely high as companies aggressively fight for new customers. However, the country is in the midst of a major upgrade cycle for wireless infrastructure. As MTS moves key cities and regions in its home market to 4G LTE and eventually 5G, it will provide a dangling carrot for consumers and businesses to upgrade their devices to take advantage of faster download speeds. It’s no secret that data consumption is the bread and butter that lubricates gross margins for wireless businesses.
What’s interesting about MTS is that it is become more of a conglomerate in recent years. MTS offers more than just wireless services and offers banking and cloud services now. Although the company is not really breaking out its cloud revenue, bank revenue has been higher. In the third quarter, MTS Bank delivered 15.5% growth from the previous year and returned to profitability in an otherwise challenging environment due to coronavirus.
Buyers of Mobile TeleSystems get a Russian for-profit power plant with approx. 8.6 times expected earnings in 2021 by one annual dividend of approx. 9%. It should be music of value to investors’ ears during a market crash.
Bull case for SSR has both macro and company specific drivers. On a macro scale, the outlook is for gold could not be better. The Federal Reserve has promised to keep lending rates at or near historic lows through 2023, and the ongoing purchase of government bonds is weighing down long-term interest rates. When combined with a rapidly growing money supply, the reasons for owning gold grow day by day. SSR will be a clear recipient of the rising price of gold.
More specifically for SSR Mining, it merged with Alacer Gold last year. By combining Alacer’s Copler mine in Turkey with SSR’s three producing assets, it created a company that could produce 700,000 to 800,000 gold equivalent ounces (GEO) each year. SSR is also one of a small number of mines that entered the year with a net cash position, and it plans to launch a $ 0.05 quarterly dividend beginning in the first quarter of 2021.
Investors wishing to add some luster to their portfolio can pick up shares in SSR Mining for less than five times the expected cash flow per share. Shares in 2021.
I know what you might be thinking – buying bank shares Having a market crash is probably the last thing you want to do. But when things look gloomier, it often is when the best deals can be obtained. Next time a crash hits the regional banking giant US Bancorp (NYSE: USB) would make a nice addition.
One of the reasons US Bancorp has been such a success for so long is the company’s relatively conservative management team. This is a company that avoided the temptation of buying more risky derivative investments, such as walloped money center banks during the Great Recession. Because it focuses on the bank’s bread and butter (growth in loans and deposits) and avoids risks, its return on assets is normal among the best in the industry.
Something else US Bancorp excels at getting its customers to bank online or with its mobile app. At the end of November 2020, 77% of all transactions were completed digitally, up from 65% two years earlier. Even more impressive: 56% of loan sales took place online in the last quarter, up from just 32% per year. November 2018. Since digital transactions cost only a fraction of what branch and telephone transactions cost, US Bancorp has been able to consolidate some of its branches and reduce its non-interest expenses.
Typically, US Bancorp carries a fairly high premium given its history of outperformance. But buyers can acquire shares right now for about 11 times next year’s earnings.
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