The Federal Reserve is not purposefully trying to crash the economy, but it might end up doing so anyway. Because out-of-hand government spending reignited inflation’s rise, the Fed is no longer eager to cut sky-high interest rates. It’s even being whispered the central bank could even raise rates again.
Threading the needle between interest rates, politician-induced inflation and the economy is no easy task, and why central bankers are a problem for the average consumer. The whole enterprise can end up in a so-called hard landing with devastating results for families already hard-pressed to make ends meet.
Although there’s no will in Washington to change the status quo, it doesn’t mean you need to accept things as they are. You need to protect your downside by finding stocks to buy for the coming market crash. Buying stocks that can weather the storm and grow with the eventual recovery is essential.
That’s why the three stocks to buy below should be on your radar. They have been through multiple market corrections before and come out stronger. Add them to your portfolio today to boost your chances of coming through the other side of a crash in even better shape than you went in.
Digital Realty Trust (DLR)
Many investors might scratch their heads over recommending a real estate investment trust (REIT) as a stock to buy for a downturn, but Digital Realty Trust (NYSE:DLR) is different. It is the world’s largest owner of data centers, with well over 300 properties in its portfolio. It counts Meta Platforms (NASDAQ:META), JPMorgan Chase (NYSE:JPM), Oracle (NYSE:ORCL) and both AT&T (NYSE:T) and Verizon (NYSE:VZ) among its biggest customers.
Business continues to move its data to the cloud, and artificial intelligence (AI) is an increasingly critical component for ensuring the health and integrity of the information. The need for data centers won’t abate during a market crash. It would be just as important that data is accessible and viable — if not more so, particularly considering the caliber of Digital Realty’s clients.
Founded in 2004, the data center REIT came through the financial crisis of the late 2000s just fine as well as after the global pandemic. And where the S&P 500 suffered a loss during the ensuing recession, the Digital Realty stock generated returns for investors.
UnitedHealth Group (UNH)
Dividend stocks will be an important component of surviving and thriving in a market crash, and UnitedHealth Group (NYSE:UNH) is an excellent dividend growth stock to buy. Because it is tied to the healthcare industry, it is a naturally recession-resistant business.
Health is not something people will skimp on simply due to being in a downturn. The number of people needing healthcare coverage only increases over time. For the past quarter century, UnitedHealth Group stock generated total returns of more than 8,500% versus 560% returns by the popular benchmark index. UNH has increased its dividend payment at a compounded annual growth rate of 20% over the past decade.
The insurer produced revenue of over $372 billion last year and forecasts it will grow sales at over 14% annually over the next few years. That’s the same rate Wall Street expects UNH to increase its earnings. Those are powerful numbers and show just how resilient UnitedHealth Group stock is through thick and thin.
Domino’s (DPZ)
Speaking of dividends, few stocks have been bigger dividend powerhouses than Domino’s (NYSE:DPZ). Its payout has grown by over 20% CAGR over the past decade while delivering total returns of 626%. More impressive, since its 2004 initial public offering (IPO), the pizza shop outpaced both the S&P 500 and UnitedHealth. It returned over 3,665% for investors versus 1,478% for UNH shareholders and 346% for index investors.
The power of compounding and interest will get you through many a tight spot. And there is good reason to think that will continue.
According to data from Euromonitor and Morningstar, Domino’s has taken some 210 basis points of market share from the quick-serve pizza category since 2018. Its global share of sales now stands north of 20%.
It achieved this status through its strategy of fortressing or flooding a market with stores. While it can lower individual restaurant sales, total combined sales grow. It also improves profitability because it creates greater mindshare amongst consumers while reducing the costs of marketing. With other chains now adopting the strategy, DPZ stock is way out in front, and ordering a pizza will remain a relatively cheap, convenient fast-food option during a market crash.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
