There is some discussion as to whether the second wave of the coronavirus will cause the economy to shrink to the point that the stock market crashes. Though a crash is unlikely, it is certainly possible. If a crash occurs, it will take place across several days or the entirety of a week or two as trading is automatically halted after the market suffers a significant midday drop.
This is a time to get somewhat defensive, investing in a diversified mixture of stocks, some with considerable risk and others that are comparably safe. Furthermore, your money should be invested in stocks that span an array of industries and geographic locations.
Let’s take a quick look at three stocks worthy of your money should the market nosedive: Walmart (WMT), Johnson & Johnson (JNJ), and 3M Company (MMM).
WMT is a retail corporation that spans several countries. From regular grocery stores to discount department stores, online sales, and hypermarkets, WMT is finding creative ways to sell items to people across the globe. The POWR Ratings reveal WMT has "A" grades in the Peer Grade, Trade Grade, Buy & Hold Grade, and Industry Rank components.
WMT is ranked above 17 other publicly traded companies in the Grocery/Big Box Retailers segment. The top analysts are bullish on WMT, setting an average price target of $160.98, meaning the stock will increase by 7% if the forecast holds. As the largest retailer in the world, WMT has clearly emerged as a pandemic winner.
WMT should climb even higher thanks to the upcoming holiday period. Even if customers don't flock to WMT stores in droves, they will certainly shop on the company's website. Furthermore, if the stock market crashes, WMT will still hold steady simply because it sells everyday products people need and desire. WMT's prices are lower than all but for those at the discount stores, many of which have lines that extend 10+ customers deep.
The moral of the story is WMT will be a winner regardless of the economy's fate.
Johnson & Johnson (JNJ)
JNJ’s medical devices, pharmaceuticals, and consumer products improve customers’ quality of life. Should the stock market tank, JNJ will still hold strong as its value proposition transcends the direction of the economy.
Check out the JNJ POWR Ratings and you will find the stock has "A" grades in the Peer Grade, Buy & Hold Grade, and Trade Grade components. JNJ is ranked 15th of 240 stocks in the Medical - Pharmaceuticals category. The top analysts anticipate JNJ will pop to $172.50, meaning it has 20% upside remaining.
JNJ has a forward P/E ratio of merely 18, indicating the stock is slightly undervalued at its current trading price of $146. JNJ's 2.76% dividend combined with its recent dip presents an attractive buying opportunity.
Investors should not hesitate to scoop up this value stock as its products will be necessary even if the economy continues to shrink and the market as a whole drops by a significant margin before the release of a coronavirus vaccine.
3M Company (MMM)
If you are worried the stock market will crash, it is prudent to park your money in stocks that sell everyday items people can afford regardless of the state of the economy. As an example, MMM’s tape, post-it notes, and other commonly-used products will be purchased regardless of whether the economy shrinks or expands. MMM also provides drug delivery, healthcare, electronics, and safety-oriented products/services to boot.
Take a look at MMM's POWR Ratings and you will find it has "A" grades in the Industry Rank, Buy & Hold Grade, and Trade Grade components. MMM is ranked second of more than 60 publicly traded companies in the Industrial - Machinery space. MMM Has a reasonable forward P/E ratio of 20.18 along with a dividend of 3.40%.
Even if the virus continues to linger, MMM stands to benefit simply because it sells the popular N95 protective face coverings and other protective respirators. Though MMM has not quite returned to its pre-coronavirus trading price of $180, it is steadily making its way back to this level.
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WMT shares were trading at $151.57 per share on Tuesday afternoon, up $0.64 (+0.42%). Year-to-date, WMT has gained 29.20%, versus a 14.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.3 Top Stocks to Buy if the Market Crashes appeared first on StockNews.com