When investors panic, they sell stocks indiscriminately. In other words, the baby is thrown out of the bath water during the market crash. Even the highest quality stocks are beaten when the system is at stake.
Last year, I saw this crisis in person. Between February and March 2020, the S & P / TSX Comprehensive Index lost 33.6% of its value. Some stocks in the index have fallen much deeper. However, some stocks survive the market crash and may function as portfolio shock absorbers in the future.
This is my top two selection of crash prevention stocks in the market.
Market Crash Buffer # 1
Power supply is an essential definition.This is probably the reason Fortis (TSX: FTS)(NYSE: FTS) Last year’s crisis was handled better than other stock markets. During the 2020 market crash, stocks lost only 20% of their value. By April, stock prices had fully recovered to pre-crisis levels.
At the time of writing, Fortis looks like an undervalued strain. It offers a profitable 4% dividend and is traded at a price-to-book value ratio of 19. The price-to-book value ratio is only 1.36.
Fortis pays far less than you can pay with dividends. The payout ratio for the past year has been only 74%. This means that there is plenty of room to increase dividends. In fact, the company has a track record of annual dividend increases dating back 46 years. Today, annual payment increases are almost certain.
Investors, on the other hand, don’t have to worry about capital losses if the stock market crashes again in the near future. Households need to keep their lights on, regardless of pandemic or economic situation.
Market crash buffer # 2
Food is as important as electricity.so Loblaw Companies (TSX: L) It was very strong at the time of the last market crash. In fact, Rob Lowe outperformed Fortis during the two months when the stock market bottomed out. From February to March 2020, Rob Lowe’s inventory fell by only 6%. Full recovery by the first week of April.
Equity performance during the historic crisis solidifies its position as a market crash prevention investment. Loblaw offers a dividend yield of 2.14% and is traded at a price-earnings ratio of 20. That is, it is attractively undervalued and needs to attract the attention of all value investors.
Loblaw also has hard assets as part of its portfolio, making it even more robust. The company owns 7% of real estate with retail stores. It also owns 4% of the real estate in which the franchisee operates.These properties further buffer the balance sheet and loblaw Canada’s safest stock..
Another stock market crash may be imminent. When a panic begins, even high quality stocks are punished. However, some important service providers, such as Fortis and Loblaw, have the potential to survive the next storm. These inventories should be an alternative to flying to safety.
Looking for higher quality stocks? Here is the list.
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Stupid contributor Vishesh Raisinghani There are no positions in any of the listed stocks. Motley Fool recommends FORTIS INC.
Top 2 market crash prevention stocks
https://www.fool.ca/2021/03/06/top-2-market-crash-proof-stocks/ Top 2 market crash prevention stocks