The economy has ups and downs, with expansions and recessions impacting stocks in varying ways. For companies in cyclical sectors, the volatility can often be incredible during downturns. However, other sectors offer more stable investment options during economic turbulence. For those looking to invest amid potential economic uncertainty ahead, picking the right stocks in the right areas of the economy is important.
Despite misconceptions, the U.S. economy exhibits promise. GDP grows steadily, and unemployment remains near historic lows of nearly 4%. Additionally, reduced inflation stabilizes prices, easing financial strain. Wage hikes and strong consumer spending indicate healthy demand, and investments in infrastructure and innovation bolster job creation.
With that said, if the economy were to falter, being invested in more stable and consistent companies with durable balance sheets is a prudent move. Here are three stocks to buy for a market crash that I think fit the bill nicely.
Restaurant Brands International (QSR)
If you are looking for a market crash-safe investment in the food industry, Restaurant Brands International (NYSE:QSR) is a top choice. The company’s recent results were impressive, with revenue hitting $1.74 billion this past quarter, surpassing estimates. Despite that, the stock still saw an 8.1% drop year-to-date, as the company’s forward guidance was mixed.
This diverse brand portfolio mitigates reliance on any single market segment. With burgers, chicken, coffee and donuts and subs in its portfolio, Restaurant Brands is among the most diversified ways to play the quick service restaurant (or fast food) sector. If we do see a downturn in the economy, strong trade down to this segment could boost the company’s profitability. That’s an easy thesis to understand and one I’ve touted for some time with this name.
This past quarter, Restaurant Brands’ organic adjusted operating income rose 7.7%, reflecting revenue growth and effective cost management. Digital sales surged across all segments, notably in Tim Hortons, showcasing the company’s adeptness in leveraging technology for revenue enhancement. If this momentum continues, there’s a lot to like about this stock’s long-term prospects.
Vanguard Total Stock Market Index Fund (VTI)
Vanguard Total Stock Market Index Fund (NYSEARCA:VTI) provides broad access to the U.S. equity market. An expense ratio of 0.02% covers nearly 4,000 stocks, including the biggest Magnificent 7 stocks and a range of other smaller but meaningful players in the market.
Choosing an index fund for exposure to the market is something active investors can do as well. While typically a passive investing tool, ETFs like VTI provide the kind of broad exposure that benefits those who don’t want to spend time digging into stocks. For those taking a more active approach, using an ETF like this as a portfolio base can be a good starting point.
VTI presents a straightforward investment strategy suited for those optimistic about the U.S. economy’s long-term growth. Its mix of large, mid and small-cap stocks offers diversity and stability, potentially yielding around 8% annually for investors with a long-term perspective. While historically more volatile due to small and mid-cap fluctuations, VTI remains a robust option among ETFs.
Procter & Gamble (PG)
If consistent dividend payouts are what you’re looking for before investing, Procter & Gamble (NYSE:PG) is a top choice. The company has been paying out generous dividends for over 100 years.
Coupled with cost reductions, the company accomplished robust profit expansion and positive returns for shareholders. The company also improved its gross profit margin, adding more operating profits — after it adjusted for currency exchange rates. The company’s diluted earnings per share surged 18% year-over-year this past quarter, marking a notable achievement for P&G.
P&G has faced concerns over pricing power limits but pleasantly surprised investors with robust results in fiscal Q2. The company offset rising costs by increasing prices, resulting in a 3% organic sales growth. CEO Jon Moeller expressed satisfaction with the strong performance. With a 2.4% yield and trading at 27 times earnings, PG stock presents an intriguing option for investors seeking value, defensiveness and income.
On the date of publication, Chris MacDonald 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.