3 stocks you can buy with confidence after a market downturn
There is no such thing as a recession-proof company. Different types of recessions can affect different sectors and companies. However, if you’re looking for good stocks to buy when the market inevitably heads south, you want the companies likely to go through the next downturn to look stronger.
Recessions usually have a greater impact on companies that are overvalued. When an economic downturn occurs, people scramble for safe haven investments, which is why I recommend Louisiana and the Pacific (New York Stock Exchange: LPX)And Johnson & Johnson (New York Stock Exchange: JNJ) And targeting (New York Stock Exchange: TGT). They have more growth than you can weather in recessions, yet they are not very expensive based on price-to-earnings (P/E) ratios. In addition, all three reward sick investors with quarterly dividends.
Stick to Louisiana and the Pacific for stability and some growth
Louisiana Pacific is a lumber company that makes many products for construction such as OSB boards, siding, racking, and engineered lumber. The company operates in the United States, Canada, Chile and Brazil.
Louisiana and the Pacific saw steady growth. Over the past three years, the stock price has gone up more than 124% while the company’s revenue has gone up 79.78% and earnings per share (over the subsequent 12 months) have gone up 235.9% over that period.
The company recently raised its dividend by 13% to $0.18 per share, which is up to 1.18%. The stock is up more than 71% this year, but it’s still a bargain based on a P/E ratio of 5.4 and a forward P/E multiple of 4.8.
In the second quarter, the company recorded record net sales and Earnings before interest, taxes, depreciation and amortization, or EBITDA. Net sales for the quarter were reported at $1.3 billion, up 142% year over year, and adjusted EBITDA was $684 billion, up 16.5% from the same period in 2020.
Louisiana Pacific also spent $465 million in the first quarter to buy back 7.3 million shares of stock, adding value for its investors. The company has increased earnings per share for five consecutive quarters. The housing shortage that has driven up home costs means home builders have a long way to go to keep up with demand, and Louisiana and the Pacific should benefit from increased homebuilding.
Johnson & Johnson can’t be stopped
The key to Johnson & Johnson’s strength is its size and diversity of income sources. The company’s stock is up about 3% for the year and has a price-to-earnings ratio of 24, below the industry average of 27.
When the pandemic hit in 2020, the company’s stock quickly fell from $151.80 on February 2 to $109.16 per share on March 23, but quickly resurfaced, reaching $152.30 by April 17, higher than it was before the pandemic began. . This is a company built for the long term. Over the past five years, revenue has increased 30.87% and earnings per share (diluted) are up 53.39%.
The company is king of profits which has raised its dividend for 59 consecutive years, including a 5% increase this year to $1.06 per share. As of this writing, the percentage is 2.56%.
In the second quarter ended July 21, the company reported sales of $23.3 billion, an increase of 27.1% year over year. Earnings per share were $2.35, up 72.8% compared to the same period in 2020.
The company has 136,000 employees and It operates in three divisions, all seeing improved sales this year: medical devices, consumer health, and pharmaceuticals. The medical device segment saw the strongest increase in the quarter, year-over-year, as it was hardest hit by the pandemic. In the second quarter, the company reported medical device sales of $6.9 billion, up 62.7% year over year.
The company’s most profitable segment is the pharmaceutical segment, which generated $12.6 billion in revenue in the quarter, up 17.2% over the same period in 2020. Moreover, the company secured five approvals between the US and Europe during the period, which would It’s great general For most pharmaceutical companies.
The goal continues to evolve
Target is one of the few retail stores that has figured out how to capitalize on online sales while retaining in-store business. The company has grown revenue and EPS for four consecutive years. Target’s stock is up more than 35% this year, yet its price-to-earnings (P/E) (TTM) ratios and futures price-to-earnings (P/E) ratios are hovering around 18.
The company became the dividend king this year when it raised its dividend for the 50th consecutive year, increasing its quarterly dividend by 32% to $0.90 per share, which amounts to a return of about 1.23%.
There are a few elements that make a goal Better organized to survive an economic downturn. First of all, it has already seen an increase in sales during the pandemic. Its stores have grocery sections and people tend to eat more at home when they want to save money, or as in the case of a pandemic, when eating out becomes a risk. The company has also done a great job of providing trendy clothing at competitive prices.
In the second quarter, the company reported revenue of $25.2 billion, up 9% from record growth in the same quarter last year. Digital sales grew 10% year over year, led by same-day services, and diluted earnings per share were $3.65, an 8.9% improvement over the same quarter last year.
The choice is up to you
For me, it makes sense to buy all three of these stocks when their stocks are going down or if the general market appears to be going through a downturn. The Louisiana-Pacific region has had the most impressive rides over the past three years despite the pandemic, and its low rating makes it the easiest option for me. Target would be my second choice, because it appears to be thriving while other retailers are struggling and also has strong stock price growth. I also like Johnson & Johnson because it has the best of the three dividend payouts, although its share growth is the slowest. The company’s size makes it better able to deal with the turmoil in the market that is bound to come with time.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of Motley Fool’s premium advisory service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.