Every stock market downturn tests the resolve of long-term investors. It’s possible to endure several consecutive days of losses. If you don’t like the idea of holding onto a growth stock that goes through sharp peaks and valleys, you may want to stick with investments that offer more stability.
The best stocks during market downturns tend to have reasonable valuations and offer essential products and services. People can trim their costs on luxuries like fancy cars and travel, but people still have to buy food at a local grocery store. These stocks offer more insulation than most investment opportunities during market downturns.
iShares Gold Trust (IAU)
The iShares Gold Trust (NYSEARCA:IAU) reflects the performance of the price of gold. The fund has a 0.25% sponsor fee.
Gold is one of the best assets to shield yourself from market downturns. The precious metal always has intrinsic value and a limited supply. Gold keeps up with inflation and acts as a good hedge. The precious metal also performs well during economic cycles with declining interest rates.
IAU has outperformed the S&P 500 over the past five years. The trust is up by 80% over the past five years and has already registered a 13% year-to-date gain. The iShares Gold Trust has generated a CAGR of 12.81% over the past five years.
Gold has very little correlation with the stock market and can gain value when equities endure sharp corrections. The trust’s beta is only 0.16, which indicates it has very little volatility relative to the rest of the market.
American Express (AXP)
People will always use their credit and debit cards to make purchases. While fads may come and go, companies like American Express (NYSE:AXP) will continue to generate revenue for every credit and debit card transaction.
American Express put itself on more investors’ radars after reporting stellar Q1 2024 earnings. Revenue increased by 11% year-over-year (YoY) while net income surged by 34% YoY. Revenue came in as expected, while net income exceeded expectations.
The fintech firm added 3.4 million new card acquisitions in the quarter. More than 60% of the company’s new customers are Millennial and Gen Z consumers. American Express is aiming for revenue growth ranging from 9% to 11% per year beyond 2026. EPS growth is expected to stay in the mid-teens during that span.
American Express stock is outperforming the stock market with a 25% year-to-date gain and a 99% gain over the past five years. The stock only trades at a 20 P/E ratio and offers a 1.20% dividend yield.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) offers essential home care products under numerous household brands. The company has endured many economic cycles and has been around for almost 200 years. Procter & Gamble has also gone through a stretch of 133 consecutive dividend payments. The firm has also raised its dividend for 67 consecutive years.
The company isn’t reporting high growth numbers. Revenue only increased by 1% YoY in Q3 FY24. Diluted EPS growth was better and came in 11% higher than the same period last year. Every segment except the Baby, Feminine, & Family Care segment raised its net sales YoY. Procter & Gamble raised its guidance for fiscal 2024 diluted net earnings per share.
Although Procter & Gamble isn’t known for outperforming the stock market, its 10% year-to-date gain exceeds the year-to-date returns for the S&P 500 and the Nasdaq 100. The stock has a 26.40 P/E ratio and offers a 2.51% dividend yield.
On the date of publication, Marc Guberti did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.