The market sell-off this year has been relentless and shows no signs of slowing down in the near term. With the S&P 500 and Nasdaq Indices each fell 20% or more over the year and officially in a bear market, many analysts and traders refer to this year’s downturn as a “crash.”
Famed investors Michael Burry and Jeremy Grantham have each compared this year’s market decline to the dotcom and housing crashes of 2000 and 2008. They predict investors will be in more pain as central banks around the world raise interest rates to reverse stubbornly high inflation. to their target of 2%.
The good news for individual retail investors is that there are several solid stocks in the S&P 500 index that can be bought now at discounted prices and offer predictable future gains.
Here are seven S&P 500 stocks to buy during the current stock market crash.
||bank of America
Giant of consumer electronics Apple (NASDAQ:AAPL) remains the largest stock in the S&P 500 index by weight. With a market cap of $2.5 trillion, Apple is the largest publicly traded company in the US
Before Covid-19, Apple’s market cap was over $3 trillion, making it the most valuable company in the world. It is difficult to overestimate the magnitude and scope of Apple’s influence on the S&P 500 and other indices. A drop in AAPL stock could pull the entire market down and send investors sprinting for the exits.
Fortunately, Apple remains a stable, profitable and well-run company led by Tim Cook. Apple’s core electronics products, such as iPhones, Apple Watches and MacBook computers, remain indispensable around the world, complemented by a growing number of services such as Apple TV, books and podcasts.
The company’s continued success is the main reason why AAPL stocks have fallen just 14% this year, proving to be more resilient than many other technology stocks. Over the past five years, Apple’s stock price has risen 300%.
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There are plenty of reasons for investors to stay excited about the electric vehicle manufacturer Tesla (NASDAQ:TSLA).
While the Austin, Texas-based company has faced challenges this year in the form of regulatory scrutiny, renewed Covid-19 restrictions in China and a slowdown in consumer demand, it has also had multiple successes. These include opening a new factory outside Berlin, Germany, and doubling US car sales. Tesla remains the global leader in electric vehicles, and all other automakers are rushing to catch it.
As for the company’s stock, TSLA’s stock has just split for the second time in as many years. On August 24, Tesla split its shares on a 3-for-1 basis. This followed a 5-for-1 stock split in August 2020. The latest split has caused the price of TSLA stock to drop to just under $300 per share.
An 18% drop in share price has also made the stock more affordable for retail investors. Many analysts continue to expect Tesla to remain the global leader in EV sales for the foreseeable future, as the company allocates 19% of its gross profits to research and development (R&D), allowing it to stay a few steps ahead of its competitors.
United Health (UNH)
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Healthcare is not really subject to economic cycles. Healthcare is more affected by demographics, such as population aging, as well as government regulations, prescription drug approvals and technological advancements. As such, health stocks can help a portfolio weather the ups and downs of the economy and the market. One of those stocks is: UnitedHealth Group (NYSE:UNH), the largest health insurer in the US and the largest healthcare company in the world with annual revenues of more than $285 billion.
One of the top 10 stocks in the S&P 500 index, UnitedHealth shares are up 3% this year. Over the past 12 months, UNH stock is up 26% despite the broader downturn in stocks. The size and resilience of UnitedHealth’s stock is one reason investors should consider owning it to help them weather a stock market crash.
UnitedHealth also continues to grow and get bigger. The company has just received major approval in its efforts to acquire the healthcare technology company Change healthcare (NASDAQ:CHNG) for $8 billion.
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While it hasn’t had a significant outbreak in over a year, credit card giant Visa (NYSE:V) remains a reliable blue-chip stock. This year, the V share has fallen 14%. But in the past five years, Visa’s stock has risen nearly 80% and 660% in the past decade. The San Francisco-based payment company has proven that it can withstand economic and market shocks and emerge stronger on the other side.
The company also has a track record of adapting to technological upheaval, which is now the case with an increase in competing financial technology (fintech) companies and payment apps such as Block (NYSE:SQ) and SoFi technologies (NASDAQ:SOPHIA).
Despite competitive pressures, Visa remains the market leader among incumbent credit card companies. In 2020, nearly half (49%) of US adults had a Visa card in their wallet, compared to 39% who owned a Mastercard and 15% who owned an American Express card. Visa is also a cash cow, generating $16 billion in free cash flow in the past year, giving it the resources to withstand any stock market crash.
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Big box dealer Costco (NASDAQ:COST) is a reliable bet in any economy. The Seattle-based company has managed to get its 117 million cardholders to renew their membership this year by offering lower prices on products ranging from gasoline and glasses to meats and vegetables.
As inflation has driven up consumer prices sharply, people continue to turn to Costco for deals. This loyalty from its customers allowed Costco, which reports its revenue monthly, to announce revenue of $17.55 billion in August, up 11% from a year earlier. The company’s same-store sales increased 8.7% during the month.
There is still speculation that Costco plans to increase its membership fees to offset the effects of inflation. This speculation grew louder after competitor Sam’s Club announced it was increasing its basic membership fee from $45 to $50. So far, however, Costco has kept its two-tier membership fees steady at $60 and $120, respectively. The company has also kept intact its popular $1.50 hot dog and soda deal, which has been applauded by customers.
Year-to-date, the COST stock is down 13%.
Coca Cola (KO)
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People keep drinking Coca Cola (NYSE:KO) even if the stock market crashes. Some people may drink more Coke when stressed by acidic market conditions. This makes KO stock a solid investment for investors to hold through market cycles.
In fact, Coca-Cola’s shares are so stable that some analysts compare it to a bond. The stock price never rises or falls dramatically, but moves up a few inches over time, all the while paying a decent quarterly dividend yielding 2.95%.
This year is a good example of the even temper of KO stocks. Year-to-date, the share price has risen a slight 0.7%. In the past five years, the share has increased 32%. After Coca-Cola saw sales slow in 2020 due to restaurant and location closures due to Covid-19, Coca-Cola is coming back. In 2021, the Atlanta-based company’s revenue grew 8% as global lockdowns ended. Coca-Cola expects sales to grow another 12% to 13% this year. Earnings per share are expected to rise 5% to 6% for the full year.
Bank of America (BAC)
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Higher interest rates have to hurt the finances of bank of America (NYSE:BAC), the second largest lender in the US. Over time, the higher rates on mortgages, lines of credit and other loans will certainly show on Bank of America’s balance sheet and stock price. But in the short term, the Charlotte, North Carolina-based financial institution is grappling with a slowing consumer loan business, diminishing revenues from its trading and deal desks, volatile commodity prices and growing fears of an economic recession.
Those issues have contributed to BAC’s stock falling 27% this year. But rather than worry, intrepid investors should view the slump in BAC stocks as a buying opportunity. In addition to its share price decline, Bank of America also has a low price-to-earnings ratio of 10.36x and pays a dividend yielding 2.7%.
History shows that bank stocks are among the first to recover as the stock market recovers from a crash, and Bank of America shareholders should benefit from the high interest rates over an extended period of time.
At the date of publication, Joel Baglole had long positions in AAPL, V and BAC. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com Publication Guidelines.