3 Stocks You Can Confidently Buy After a Market Downturn

There’s really no such thing as a recession-proof company. Different types of recessions can impact different sectors and businesses. However, if you’re looking for good stocks to buy when the market inevitably goes south, you want companies that are likely to come through the next downturn looking even stronger.

Recessions generally have a bigger impact on companies that are overvalued. When a downturn hits, people scramble for safe-harbor investments, and that’s why I recommend Louisiana-Pacific (NYSE:LPX), Johnson & Johnson (NYSE:JNJ) and Target (NYSE:TGT). They have the type of growth than can weather recessions, yet are not overpriced based on their price-to-earnings (P/E) ratios. Plus, all three reward patient investors with quarterly dividends.

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Stick with Louisiana-Pacific for stability and some growth

Louisiana-Pacific is a lumber company that makes various products for building such as OSB board, siding, trim, l-joists and engineered wood. The company has operations in the U.S., Canada, Chile, and Brazil.

Louisiana-Pacific has experienced consistent growth. Over the past three years, the stock’s price has risen more than 124% while the company’s revenue has climbed 79.78% and earnings per share (over the trailing 12 months) are up 235.9% over that period.

The company recently raised its dividend by 13% to $0.18 per share, which works out to a yield of 1.18%. The stock is up more than 71% this year, but it’s still a bargain based on its P/E ratio of 5.4 and forward P/E of 4.8.

In the second quarter, the company reported record net sales and earnings before interest, taxes, depreciation, and amortization, or EBITDA. Net sales for the quarter were listed at $1.3 billion, up 142% year over year and adjusted EBITDA was $684 billion, up 16.5% over the same period in 2020.

Louisiana-Pacific also spent $465 million in the quarter to repurchase 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 that homebuilders have a long way to go to catch up with demand, and Louisiana-Pacific should benefit from increased home building.

Johnson & Johnson can’t be stopped

The key to Johnson & Johnson’s strength is its size and diverse income streams. The company’s stock is up about 3% for the year and its P/E is 24, lower than the industry average of 27.

When the pandemic hit in 2020, the company’s stock took a quick dive from $151.80 on Feb. 2 to $109.16 a share on March 23, but then quickly rose to the surface, reaching $152.30 by April 17, higher than it had before the pandemic began. This is a company built for the long run. Over the past five years, revenue is up 30.87% and earnings per share (diluted) is up 53.39%.

The company is a Dividend King that has raised its dividend for 59 consecutive years, including a 5% raise this year to $1.06…