3 No-Brainer Stocks to Buy in a Market Crash

Except for one or two big drops along the way, like the one caused by the start of the pandemic last year, the S&P 500 has been on what’s essentially a multi-decade run higher. A bull market that long in the tooth can get people jittery.

Chinese property owner Evergrande looks as though it may default on its debts, and many fear this could spark a domino effect causing a global economic recession, which is why the stock market plunged last week.

Although the market has since recovered all that lost ground, it’s never too soon to plan for another crash. Colgate-Palmolive (NYSE:CL), Airbnb (NASDAQ:ABNB), and Altria (NYSE:MO) are three stocks that could help insulate your portfolio from the next downturn.

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Invest in your own medicine chest

Eric Volkman (Colgate-Palmolive): Before a bomb drops on the market, run for the shelters. A safe place with thick walls and a well-stocked pantry is the consumer staples sector, and Colgate-Palmolive is one of the most solid companies in it.

No matter how strained the economy, people are still going to need toothpaste and hygiene products to make their way through life. They might save money by forgoing the latest whiz-bang Apple gizmo or Tesla car, but they won’t go without detergent. This is a big reason why makers of unglamorous but necessary goods like Colgate-Palmolive are such effective crash/recession hedges.

The company makes mass-market products bought on a regular basis by consumers around the world, and it’s likely you have at least one of these products in your own closet or medicine chest. In addition to the Colgate toothpaste line and Palmolive dishwashing liquid that comprise its name, the company also holds the Softsoap, Irish Spring soap, and Speed Stick deodorant brands in its bulging portfolio.

As a result, Colgate-Palmolive always posts a high revenue figure, throws off piles of cash, and typically nets bottom-line profits at comfortable margins. In 2020, for instance, its revenue was nearly $16.5 million, with GAAP net profit coming in at slightly under $2.7 million, and free cash flow of over $3.3 billion.

The latter always provides plenty of room for the company’s relatively generous dividend (which yields 2.4% these days). Colgate-Palmolive can easily crank this higher given such cushioning. Consequently it’s a frequent raiser of its payout, to the point where it reached Dividend King status years ago.

There is some concern that the notably strong quarterly growth in recent times will fade. After all, net sales rose by nearly 10% year over year in the most recently reported quarter, with per-share earnings jumping 12%. The worry is that the stockpiling of consumer staples trend we saw during the pandemic will melt away as we (at least hopefully) finally begin to get over COVID-19.

That’s understandable, but Colgate-Palmolive has proven in its long history that it can improve both revenue and profitability in the…