Stock market crash? 3 shares I’ll buy if it happens

The next stock market crash could be on the horizon. Charles Archer believes that these three stocks could help him to weather the storm if it happens.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

A stock market crash. It could happen. At 4,105 today, the FTSE 350 is higher than it was prior to the 2008 financial crisis.

The start of the coronavirus pandemic sparked a mini-crash in March 2020. The Dow Jones suffered a 7.79% fall on 9 March, and then on 10 March, the FTSE 100 lost £125bn in value in just one day. 

Markets swiftly recovered and have since risen to record highs. However, across Europe, the UK, and US, central banks have kept interest rates below 1%. Governments have pumped hundreds of billions of pounds in quantitative easing and government support schemes into the financial system. The Bank of England expects inflation to hit 4% this year, and there’s rising concern over the delta variant. I think there’s a chance that the recovery is premature, and we could experience another stock market crash. 

I think these three stocks could help me to weather the storm.

Fast food

McDonald’s (NYSE: MCD) managed to actually make gains in the 2008 crash. This makes sense — in times of economic uncertainty, consumers appreciate the affordability of fast food. The company has been continually innovating. Most branches now have self service tills and offer delivery. Its app has been pushed aggressively, helping to increase cash flow by 12.8% to $6.3bn between 2017 and 2020.

There are downsides though. The share price hit its all-time high of $242 last week, leaving plenty of room to fall. In the wake of the pandemic, new taxes to reduce obesity could hit the fast food sector. In addition, its restaurants have had to increase wages to attract staff due to a significant labour shortage. With thin profit margins, this could hit profitability.

Value shopping

B&M European Value Retail (LSE: BME) is another stock I’d buy if there’s a stock market crash. It anticipates revenue of £4.8bn for FY 2021, an increase of 58.4% compared to FY 2018. The company is benefitting from the rapid growth of discount retailers, including the likes of Primark, Lidl, and Aldi. If there is a stock market crash, I think it’ll benefit from price conscious consumers with diminished disposable income. 

It shares a risk with McDonald’s. Its share price is at 555p, only 21p away from a high of 576p. In addition, it has competition from other budget chains like Poundland and Wilko. As many of its products are manufactured abroad, it could be hurt disproportionately by supply chain disruption, and increased transport and warehousing costs. 

Stock market crash 

British American Tobacco (LSE: BATS) is one of the largest tobacco companies in the world. In the 2008 recession, it lost very little of its value, and its share price now sits at 2,656p. In its earnings report last week, first half revenue increased 8.1% to £12.2bn.  It has a significant 8.0% dividend yield, double the FTSE 100 average, though it does have a substantial debt burden.

Tobacco is a declining market, so this giant will soon have to generate profits from diversification. Encouragingly, revenue from new categories increased 50%, due to cannabis and vaping sales. Its competitor, Philip Morris, plans to stop selling cigarettes in the UK within 10 years. 

I think it could lose investors on ethical grounds. There’s also a potential ban on menthol cigarettes in the US that could hurt profitability. However, it’s still a stock I’d buy in a stock market crash.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charles Archer owns shares of British American Tobacco. The Motley Fool UK has recommended B&M European Value and British American Tobacco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

The flag of the United States of America flying in front of the Capitol building
Investing Articles

2 UK shares that could rise if Trump wins the Presidential election

These UK shares are among the FTSE 100's most popular stocks. And they could rise in value if Donald Trump…

Read more »

Closeup ruffled American flag representing US stocks and shares
Investing Articles

2 UK stocks that could rise if Harris wins the Presidential election

Royston Wild believes these UK stocks could receive a bump if Kalama Harris wins the Presidency, giving their share prices…

Read more »

Investing Articles

After a 96% plunge, is buying more Aston Martin shares throwing good money after bad?

Just two weeks after buying Aston Martin shares Harvey Jones found himself nursing a painful loss. Yet after recent news…

Read more »

Investing Articles

After crashing 45% in October, should I buy this FTSE 250 share for my Stocks and Shares ISA?

Roland Head explains why he’s tempted to add this risky FTSE 250 turnaround share to his Stocks and Shares ISA…

Read more »

Investing Articles

Could I use a stock market crash to turn £20k into half a mil in just over a decade?

A stock market crash might sound terrifying to some but it can also present a once-in-a-lifetime opportunity to accumulate generational…

Read more »

Investing Articles

Recently released: October’s small-cap stock recommendation [PREMIUM PICKS]

We believe the UK small-cap market offers a myriad of opportunities across a wide range of different businesses and industries.

Read more »

Investing Articles

Here’s how a Stocks and Shares ISA and Lifetime ISA could supercharge my wealth!

Individual Savings Accounts (ISAs) can help UK share investors take their earnings to the next level. And their importance is…

Read more »

A person holding onto a fan of twenty pound notes
Investing Articles

A high-yield dividend ETF and an investment trust to consider this November!

Investors wanting to boost their passive income could benefit from investigating these high-yield funds and trusts, says Royston Wild.

Read more »