Stock market crashes are typically difficult conversations for most retail investors. Yet occasional declines and double-digit corrections are an inevitable part of the investing cycle. As the market continues to surge higher to lofty valuations, investors are getting worried that an imminent crash could be looming around the corner and wondering which stocks to buy if the market stumbles.
The spread of the delta variant along with new emerging variants continues to threaten the global economy, further boosting jittery speculation among investors. However, even in turbulent times, many stocks can continue to thrive. Investors should, therefore, have a game plan and keep a watch list of stocks they plan to buy if prices plunge. Today, I’ll discuss seven stocks to buy if the market crashes in September.
If we count on history as a guide, a double-digit percentage decline may be long overdue. Since 1950, the widely followed S&P 500 has seen over 30 separate crashes or corrections where the index has declined by at least 10%.
But long-term investors don’t need to be fearful of market crashes. Instead, they should embrace these sell-offs as investing opportunities. Such downturns often present lucrative investment opportunities to buy top stocks at low prices. We need to remember that every previous crash has eventually ended with a bull-market rally that took the market to new highs.
With that information, here are seven stocks to buy if the market plunges in September:
- Bristol-Myers Squibb (NYSE:BMY)
- CrowdStrike (NASDAQ:CRWD)
- Green Thumb Industries (OTCMKTS:GTBIF)
- Home Depot (NYSE:HD)
- NextEra Energy (NYSE:NEE)
- Salesforce.com (NYSE:CRM)
- Trupanion (NASDAQ:TRUP)
Stocks to Buy: Bristol-Myers Squibb (BMY)
Source: Katherine Welles / Shutterstock.com
52-Week Range: $56.75 – $69.75
Dividend Yield: 3.10%
Biopharma giant Bristol-Myers Squibb offers a wide range of drugs for various therapeutic areas, such as cardiovascular, oncology and immune disorders. The company is a prominent player particularly in immuno-oncology.
Bristol-Myers Squibb released Q2 2021 results in late July. Revenue surged 16% year-over-year (YOY) to $11.7 billion. Adjusted net earnings came in at $4.3 billion, or $1.93 per share, compared to adjusted net earnings of $3.8 billion, or $1.63 per share, in the prior-year quarter. Cash and equivalents ended the period at $13.1 billion.
On the results, CEO Giovanni Caforio, M.D. said, “We delivered a strong quarter across each of our four therapeutic areas, including building momentum for our new product portfolio and Opdivo returning to growth.”
Bristol Myers acquired cancer and immunology drug developer Celgene in 2019. Celgene’s leading cancer drug, Revlimid, has boosted Bristol Myers’ annual revenue, contributing over $12 billion to the top line in 2020.
Revlimid has benefited from strong pricing power and label expansion opportunities and remains protected from the generics market until early 2026. Additionally, Eliquis has recently become the leading global oral anticoagulant drug in the market.
BMY stock offers a generous dividend yield of 3%. The share price currently hovers at $63.47 at the start of Sept. 13, up only 1.5% so far this year. Bristol Myers has a reasonable valuation, making it an attractive value stock for income investors. The forward price-to earnings (P/E) and price-to-sales (P/S) ratios stand at 7.8 and 3.2, respectively.
Source: VDB Photos / Shutterstock.com
52-Week Range: $118.10 – $289.24
Sunnyvale, California-based Crowdstrike is a leading cybersecurity vendor that focuses on endpoint protection, threat intelligence and attack remediation. The company’s cloud-based architecture collects data across all its endpoint agents, analyzes the information within its cloud platform and updates customers’ security standing.
Crowdstrike issued Q2 fiscal year 2022 results in late August. Revenue increased 70% YOY to $337.7 million. Adjusted net income came in at $25.9 million, or 11 cents per diluted share, compared to $7.9 million, or 3 cents per diluted share, in the prior-year quarter. Free cash flow soared to $73.6 million, up from $32.4 million a year ago. Cash and equivalents ended the period at $1.79 billion.
Following the announcement, CEO George Kurtz remarked, “CrowdStrike delivered an outstanding second quarter with rapid subscription revenue growth and record net new ARR generated in the quarter.”
The recent surge in cyber attacks has forced businesses to boost their spending on cybersecurity. Hence, analyst point out that companies like CrowdStrike are poised for explosive growth.
For instance, CrowdStrike’s Falcon security platform is highly regarded. Based on artificial intelligence technology, Falcon is designed to become more efficient at identifying and responding to threats over time.
CrowdStrike’s cloud-based services are also thriving. Its customer retention rate has reached 98%, with subscription customers surging from 450 in the first quarter of 2017 to 11,420 four years later.
CRWD stock opened on Sept. 13 at $258.72, down 8% in the past week. It has gained 18.6% year-to-date (YTD) and 99% over the past year. Forward P/E and current P/S ratios stand at 556 and 51, respectively. The decline below $260 level and even lower has created a greater margin of safety.
Stocks to Buy: Green Thumb Industries (GTBIF)
52-Week Range: $11.60 – $39.11
Chicago, Illinois-based Green Thumb produces and sells medicinal and recreational cannabis through wholesale and retail channels in the U.S. The company currently has a presence in 13 states, operating more than 60 cannabis dispensaries under Rise and Essence chains.
Green Thumb announced Q2 2021 results in mid-August. Revenue rose 85% YOY to $222 million. The company generated a total net income of $22 million, or 10 cents per diluted share, compared to a net loss of $12.9 million in the prior-year quarter. Cash and equivalents ended the quarter at $359 million.
CEO Ben Kovler said, “On a year-over-year basis, we grew revenue by 85% to $222 million; more than doubled Adjusted EBITDA to $79 million and continued to deliver positive cash flow.”
Marijuana stocks constitute another avenue investors could consider during a stock market crash. During the Covid-19 pandemic, consumers treated cannabis like any traditional consumer product and continued buying pot no matter how gloomy things looked from an economic viewpoint.
Green Thumb has been growing its brand presence in a highly competitive industry. Annual sales are expected to exceed $1 billion in 2022. The company has already reached recurring profitability, as two-thirds of the company’s revenue is derived from higher-margin derivative products such as vapes, edibles and topicals.
Over the past year, the shares have soared by 82%. The stock is up 3% YTD. Shares trade at 20.6 times forward earnings and 7.4 times current sales. The decline toward $25 makes GTBIF stock more attractive.
Home Depot (HD)
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52-Week Range: $246.59 – $345.69
Dividend Yield: 1.99%
Home Depot is the largest home improvement specialty retailer in the world, operating almost 2,300 warehouse-format stores offering more than 30,000 products in store and 1 million products online in the U.S., Canada, and Mexico.
The retail giant released Q2 results in mid-August. Total sales went up by 8% YOY to $41.1 billion. Net income came in at $4.8 billion, or $4.53 per diluted share, up from $4.3 billion, or $4.02 per diluted share, in the prior-year quarter. Diluted earnings per share surged 13% YOY. Cash and equivalents ended the period at $4.57 billion.
CEO Craig Menear said of the company’s staff, “As a result of their efforts, we achieved a milestone of over $40 billion in quarterly sales for the first time in Company history.”
Home Depot could be a good hedge for all economic scenarios. During bull market periods, investors have seen strong sales growth to commercial clients and contractors. However, when an imminent recession becomes an issue among investors, homeowners fuel growth through remodels and DIY projects.
While brick and mortar sales remain the primary revenue driver, Home Depot has also invested in digitalization to integrate its online and physical store experiences. This move has led to a significant surge in digital sales and helped the company successfully navigate pandemic-related market volatility.
HD stock hit an all-time-high of $345.69 in May. It currently sells slightly above $330 territory, up almost 26% YTD. Forward P/E and current P/S ratios stand at 24.15 and 2.47, respectively.
Stocks to Buy: NextEra Energy (NEE)
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52-Week Range: $66.79 – $87.69
Dividend Yield: 1.81%
Headquartered in Florida, NextEra Energy owns and operates the regulated utility Florida Power & Light that distributes power to about five million customers in the state. Consolidated generation capacity includes natural gas, nuclear, wind and solar assets.
NextEra issued Q2 results in late July. The company reported revenue of $3.93 billion. On an adjusted basis, net earnings surged 9% to $1.40 billion, or 71 cents per share, up from $1.29 billion, or 65 cents per share, in the prior-year quarter. Cash and equivalents ended the quarter at $1.44 billion.
CEO Jim Robo remarked, “We grew adjusted earnings per share by more than 9% year-over-year, reflecting continued strong financial and operational performance across all of the businesses.”
Utility stocks are usually slow-growing businesses that rely on the predictability of demand for their services. However, what makes NextEra unique in the utility space is its focus on renewable energy. The company has become a leading name in terms of solar or wind power generation capacity. Its emphasis on renewable energy has allowed NextEra to reduce electric-generation costs and increase its growth rate to the high single digits.
While NextEra operates in a regulated industry, it does not have exposure to volatile wholesale-electricity pricing. NextEra is a highly profitable stock and an attractive pick for income investors. Rapid transition worldwide to green energy further increases its appeal as a defensive stock. NEE stock currently hovers close to $85, up nearly 10% so far this year. It trades at 31 times forward earnings and 10 times current sales. Interested readers could consider buying the dips.
Source: Bjorn Bakstad / Shutterstock.com
52-Week Range: $201.51 – $275.22
The Dow Jones Industrial Average (DJIA) member Salesforce provides an end-to-end solution for customer relationship management (CRM). Its Customer 360 cloud platform comprises a group of AI-powered software designed to consolidate data across sales, services, marketing and commerce. As a result brands get a complete view of each customer.
Salesforce released Q2 fiscal 2022 results in late August. Total revenue increased 23% YOY to $6.34 billion. The company reported an adjusted net income of $1.40 billion, or $1.48 diluted earnings per share, up from $1.33 billion in the prior-year quarter. Total cash, equivalents and marketable securities ended the quarter at $9.65 billion.
“With companies and governments around the world continuing to accelerate their digital transformations, we delivered our fifth phenomenal quarter in a row,” said CEO Marc Benioff.
Impressive results suggest that Salesforce’s core businesses remain insulated from the pandemic. Salesforce’s services help automate business processes, decreasing an organization’s dependence on employees. Customer demand should continue to surge as companies cut costs and streamline their businesses.
Gartner identified the company as the industry leader in the CRM space, suggesting that it can execute better than its rivals. Salesforce has a market share of almost 20%, more than its next four rivals combined. Potential short-term headwinds would offer long-term investors an opportunity to buy CRM shares at a discount.
The stock hit a record high of $275.22 in the week following its Q2 earnings report. CRM stock opened on Sept. 13 at $257. It is up 14% so far this year. The shares trade at 72.5 times forward earnings and 10.3 times current sales.
Stocks to Buy: Trupanion (TRUP)
52-Week Range: $67.15 – $126.53
Seattle, Washington-based Trupanion is a specialty insurance products provider in the U.S. It sells insurance products tailor-made for pets, especially cats and dogs.
Trupanion released Q2 2021 results in early August. Total revenue surged 43% YOY to $168 million. Yet net loss stood at $9.2 million, or 23 cents per diluted share, compared to a net income of $1.4 million, or 4 cents per diluted share, in the prior-year period. Trupanion burned $5.1 million in free cash flow during the second quarter. Cash and equivalents ended the period at $124 million.
On the results, CEO Darryl Rawlings remarked, “Q2 was another great quarter with net pet growth up 60% year-over-year, led by exceptionally strong retention rates.”
The pet industry shows one of the most persistent growth trends in the U.S. Pet expenditures have seen a YOY increase over a 25-year streak. And pet parents are expected to spend almost $110 billion in 2021 for their companions, up from $97 billion in 2019.
Trupanion hit a milestone in the past quarter, exceeding 1 million enrolled pets. In fact, Trupanion has only penetrated about 1% of the U.S. pet market. If it were to reach a 25% penetration rate, analysts estimate Trupanion’s addressable market to increase nearly to $33 billion.
The leading stock in pet insurance opened on Sept. 13 at $90.36. TRUP stock is down 28% YTD. Despite the pullback in 2021, it has returned 23% over the past year. The stock currently trades 5.75 times current sales. The shares deserve your attention.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tezcan Gecgil, Ph.D., has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all three levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.
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