Stock Market Crash: 3 Discounted Stocks to Buy Now and Never Sell

There is no doubt that it has been a challenging year to be an investor. Since hitting all-time highs during the first week of January, the iconic Dow Jones Industrial Average and broad-based S&P 500 they have decreased by 13.5% and 18%, respectively, as of May 11.

For stock-dependent growth Nasdaq Composite, it has been an even more painful fall. After its closing high six months ago, the index has plunged 29%.

Although big moves down in the stock market can be scary and affect investors’ emotions, it’s important to recognize that corrections (and even bear markets) are a normal and unavoidable part of the investment cycle. When examined with a broader lens, every notable decline throughout history in the major indices proved to be a buying opportunity for patient investors.

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More importantly, as the market crashes, transactions with high-quality companies become more pronounced. What follows are three stocks at a discount that long-term investors can confidently buy now and likely never have to sell.

Berkshire Hathaway

If there is one stock that has definitely proven its ability to stand the test of time, it is its conglomerate Berkshire Hathaway (BRK.A 0.73%)(BRK.B 0.75%). Berkshire is the company headed by billionaire Warren Buffett.

Since taking the reins in 1965, Buffett has overseen the creation of more than $680 billion in value for shareholders (including himself) and has generated an average annual return of 20.1%. Taken together, we’re talking about an increase of over 3,600,000% for the company’s Class A shares (BRK.A). Although Berkshire Hathaway is susceptible to down years, there is a long enough track record to show that it regularly outperforms the S&P 500 for long periods.

One reason Berkshire Hathaway is such a savvy investment is Warren Buffett’s love of cyclical companies. A “cyclical” business works well when the US or global economy is expanding, and can struggle when recessions or slowdowns occur.

The Oracle of Omaha is well aware that recessions are an inevitable part of the business cycle. Instead of trying to calculate when they will happen, he has filled Berkshire Hathaway’s portfolio with companies that thrive during periods of expansion. The thing is, booms last considerably longer than recessions, putting Buffett’s portfolio in a perfect position to benefit from the natural expansion of US and global gross domestic product. It’s a boring strategy that pays off over time.

Berkshire Hathaway’s other not-so-subtle secret to success is the mountain of passive income it earns. After large investments in Chevron Y Verizon in the past two years, Buffett’s company appears to be on track to generate more than $6 billion in annual dividend income. Because companies that pay dividends are often profitable and time-tested, they are better equipped to weather economic downturns.

Historically, any double-digit percentage decline in Berkshire Hathaway shares has been a green light for investors to go shopping.

A smiling person holding a credit card in their right hand.

Image source: Getty Images.

MasterCard

A second discounted growth stock that investors can buy right now and never worry about selling is payment processor MasterCard (MOM 3.60%).

Like Berkshire Hathaway, Mastercard is not immune to economic downturns and downturns. If consumers and businesses cut back on their spending, Mastercard’s sales and profits are likely to decline. The growing prospect of a US recession is the likely reason the company’s shares have fallen nearly 20% from their all-time high.

However, there are a multitude of reasons to be excited about Mastercard’s long-term opportunity. For starters, it is a major player in the main consumer market: the United States. According to Securities and Exchange Commission filings for the four major credit card networks, Mastercard was responsible for nearly 23% of credit card network purchase volume in the US.

Investors can also be excited and take comfort in the fact that Mastercard acts strictly as a payment processor. While you probably won’t have a problem generating interest and fee income as a lender, becoming a lender means being exposed to loan delinquencies during recessions. Since the company does not lend, there is no need to reserve capital during recessions. This explains why Mastercard can recover faster than most financial stocks after a downturn in the US or world economy.

Speaking of the global economy, most transactions are still done in cash. Mastercard has a long way to go to organically or acquisitively expand its payment infrastructure in emerging markets. Being able to lean on predictable cash flow from developed countries, as well as rapid growth in emerging markets, should allow Mastercard to sustain a long-term annual growth rate of around 10%.

Mickey and Minnie Mouse welcome visitors to Disneyland.

Image source: Disneyland.

walt-disney

The third discounted stock that is crying out to be bought and never sold is the theme park operator and entertainment kingpin. walt-disney (DIS 2.90%). Shares of the company are nearly 44% below their 52-week high.

The biggest problem for Disney in the last two years has undoubtedly been the unpredictability of the COVID-19 pandemic. Sorry for the theme park pun, but it seemed like a merry-go-round of park closures and mitigation measures needed to fight COVID-19. In the company’s latest quarterly report, it was mentioned that closures in Hong Kong and Shanghai negatively affected Disney Park’s revenue.

While closed theme parks are less than ideal, the growing consensus among researchers seems to be that we are past the worst of what COVID-19 and its variants have to offer. Although it would be preferable if China’s response to COVID-19 cases were more in line with that of the rest of the world, the key point is that theme park disruptions are not a long-term concern.

In addition to eventually overcoming the COVID-19 headwinds, Walt Disney continues to impress on the streaming front. At the end of the fiscal second quarter (April 2, 2022), Disney+ had 137.7 million subscribers, up 33% from the same period a year earlier. Global average monthly revenue per subscriber increased 9% from the second quarter of 2021, with the company pointing to strength in existing markets and rising retail prices.

Another reason the House of Mouse makes such an obvious investment is its pricing power. Disney has a huge library of original content that helps you connect with people of all ages. Not to mention its theme parks can make anyone feel young again. Walt Disney has never had a problem passing on price increases to consumers and is therefore able to stay well ahead of the prevailing rate of inflation.

While Disney faces its fair share of short-term headwinds, its long-term future remains bright.

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