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I'm Buying These 3 Resilient Stocks During a Bear Market

The Motley Fool
The Motley Fool
 2022-01-26

Bear markets feel very unnerving to live through, but fortunately, the bear doesn't stick around long. Stocks crash and then rebound, and those rebounds happen as suddenly as when the market falls. It's best to know ahead of time what you want to buy so you don't miss out on the best deals you will ever see.

Here are three great companies I would love to buy at lower prices.

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Image source: Getty Images.

1. Costco

Selling everyday essentials at low prices makes Costco Wholesale (NASDAQ: COST) a resilient business for all economic environments. Everyone loves value, so Costco memberships stay in demand even during recessions. During the 2009 recession, Costco sales dipped only slightly from $71 billion to $70 billion, but gold star memberships increased 6% during Costco's fiscal 2009. This is the ideal kind of business I want to buy when market pessimism is at its peak.

Gold star memberships have more than doubled since 2009 to 50.2 million in fiscal 2021. Costco still has opportunities to expand internationally and grow its e-commerce business, where comparable online sales grew 44% last year.

Costco shares are still too expensive for my value preferences after the recent dip, but it's the first stock I will look to buy if America goes on sale again.

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Image source: Getty Images.

2. Netflix

Shares of Netflix (NASDAQ: NFLX) plummeted after its recent earnings report. Net subscriber additions were just shy of management's forecast, but Netflix has been here before . What I like is that Netflix is an almost indispensable form of entertainment that continues to look well-positioned for long-term growth.

Netflix's something-for-everyone content strategy has gained 221 million subscribers globally, but we're still in the early innings of where streaming media is headed over the next 30 years. With the massive lead it has in viewers and content investment, it's difficult to imagine a world without Netflix.

Subscriptions might slow when the economy is weak, but Netflix's recurring revenue stream would help me sleep well no matter how the stock market is performing. Plus, with the company's free cash flow improving, Netflix will have more cash to grow its content budget and maintain its lead in streaming.

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Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

3. Berkshire Hathaway

When the markets are crashing, Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) is a no-brainer stock to buy. It's the greatest collection of businesses and management talent ever assembled under one corporate roof.

There's a reason investors view Berkshire Hathaway as a good hedge against the volatility of growth stocks. Berkshire is highly diversified across many industries. Its most valuable assets are found among a variety of insurance and energy businesses, and include Burlington Northern Sante Fe (the largest railroad operation by freight volume) and a $310 billion equity portfolio headlined by a $128 billion stake in Apple based on market values through the third quarter.

Altogether, Berkshire Hathaway's various subsidiaries spanning Fruit of the Loom underwear to railroads generated $346 billion in trailing-12-month revenue through Q3. Most importantly, Buffett has $144 billion of cash to swing at a fat pitch in the next bear market.

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John Ballard owns Netflix. The Motley Fool owns and recommends Apple, Berkshire Hathaway (B shares), Costco Wholesale, and Netflix. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy .

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