There’s no denying that this has been one of the worst starts to a year in stock market history. Over the past weekend, the Dow Jones Industrial Average, S&P500and Nasdaq Compound were 18%, 23% and 31% lower, respectively, since the beginning of the year. From their all-time closing highs, the S&P 500 and Nasdaq are firmly in a bear market.
In one respect, a stock market crash can be disconcerting. Few investors enjoy seeing large unrealized losses accumulate over short periods of time.
On the other hand, history has conclusively shown that buying high-quality stocks during these dips is a smart move for patient investors. That’s because every notable drop in major US indexes was eventually erased by a bull market.
The stock market crash of 2022 has brought to light a number of incredible offers. Below are five incredible stocks you won’t regret buying during this downturn in the bear market.
The first phenomenal stock market investors can get at a discount is the theme park operator and content kingpin waltz disney (SAY 0.23%). Although pandemic shutdown fears persist in some countries (e.g., China), these short-term worries won’t steer Disney away from its highly successful growth strategy.
One reason to feel incredibly optimistic about Disney’s future is its library of exclusive content. This content, which drives attendance at its theme parks and drives people to watch its films, has been shown to transcend generations. It doesn’t matter whether you’re 5 years old and visiting Disneyland for the first time or taking your grandkids to see a Disney movie at the theater – the nostalgia evoked by Disney content is a clear competitive advantage.
Investors should also be excited about the rapid growth of Disney+, the company’s streaming platform. In the 2.5 years since its launch, Disney+ has signed up 137.7 million people. By comparison, it took netflix more than 10 years to exceed 137.7 million subscribers. Although a loss-making segment at the moment, Disney+ is expected to become another high-margin revenue channel that supports the company’s large and rapidly growing ecosystem.
American Eagle Outfitters
A second amazing stock you won’t regret buying during the stock market crash is the specialty retailer American Eagle Outfitters (AEO 1.28%). Even as the company faces a buildup of inventory and higher transportation costs from global supply chain disruptions, it brings a number of competitive advantages to the table.
For example, American Eagle’s management team has been outstanding for decades when it comes to price and inventory. This is a company that doesn’t discount its brands with deep discounts, but it also doesn’t stop potential buyers from making a purchase. If inventory issues arise, it has historically quickly removed unwanted merchandise from its stores. This tends to result in a higher percentage of full-price buying during periods of economic expansion.
American Eagle Outfitters has also made significant investments in its direct-to-consumer sales. Despite a difficult retail environment, digital sales in the first fiscal quarter (ending April 30) were 48% higher than comparable online sales in the first quarter of 2019 (i.e. before the pandemic).
With niche pricing for its teen-oriented retail stores and intimates brand Aerie growing like wildfire, American Eagle Outfitters is poised for long-term success.
Another obvious buy as the market dips is regional bank action. American bank (USB 0.37%), the parent company of US Bank. Even if the US enters a recession at some point over the next two quarters, US Bancorp’s long-term potential makes it a solid buy.
The beauty of bank stocks is that they are cyclical. Although recessions tend to lead to chargebacks and write-offs, periods of economic expansion last much longer than recessions. Over time, banks benefit from increased lending and deposit activity, as well as the natural growth of the US and global economy.
US Bancorp is also benefiting from its excellent digital engagement trends. At the end of February 2022, 81% of its customers were active online or via the mobile application, with 65% of total sales being made digitally. That’s an increase of 20 percentage points since the start of 2020. Loans made online or through a mobile app are considerably cheaper for the business than selling loans in person or over the phone. In other words, the company’s investments in digitalization make it progressively more efficient.
The icing on the cake is that with rising interest rates, US Bancorp’s net interest income on its outstanding floating rate loans is expected to rise.
A sensational fourth stock that can be bought with confidence as the stock market crashes is biotechnology. Exelixis (EXEL 4.34%). Despite poor investor sentiment taking over healthcare stocks at the moment, this company’s operating performance and balance sheet are all the talk.
There is no doubt that the primary growth driver for Exelixis is the cancer drug Cabometyx. This foundational therapy is approved to treat first- and second-line renal cell carcinoma, as well as previously treated advanced hepatocellular carcinoma. These indications alone have propelled Cabometyx over one billion dollars in annual sales.
What investors should know is that Cabometyx is being studied as a combination therapy or monotherapy in more than five dozen additional trials. Although not all of its clinical studies will be successful, the company’s flagship drug has ample opportunity to expand its label and sustain a high list price.
Additionally, Exelixis is sitting on a mountain of capital: approximately $2 billion, including cash, cash equivalents, cash equivalents and restricted investments. This capital gave the company the flexibility to reinvigorate its internal research program and partner with various cancer drug developers.
A fifth and final amazing title that you won’t regret buying during the market downturn is payment processor Visa (V -0.29%). Heightened fears of a recession are a near-term concern for a company with a long-term double-digit growth track.
Visa is absolutely dominant in the United States, which is the largest consumer market in the world. In 2020, it controlled 54% of purchase volume on US credit card networks (among the top four US networks) and grew its share faster than any of the other major credit card networks. credit since the end of the Great Recession in 2009.
But Visa is far from being dependent on the United States. The company plans to expand its payment infrastructure to underbanked and emerging markets where cash is still the primary transaction enabler. It also has deep pockets and has shown a willingness to use acquisitions as a route to expansion (e.g. the acquisition of Visa Europe in 2016).
Investors will also note that Visa acts strictly as a payment processor. Since he avoids lending, he is not exposed to defaults and therefore does not have to set aside capital for possible loan losses. This small detail is huge in explaining how Visa is bouncing back faster than other financial stocks from economic downturns.