For the first time in nearly two years, Wall Street is reeling. Although all three major stock indexes are well off their recent highs, it’s the growth-focused Nasdaq Composite (NASDAQINDEX: ^IXIC) that’s been hit the hardest. Over a span of three trading sessions (Aug. 1 – Aug. 5), the Nasdaq shed 1,399 points, or about 8% of its value, and has firmly entered correction territory.
Sell-offs are a perfectly normal and unavoidable aspect of the investing cycle. Even though we’ll never be able to precisely forecast when these corrections will begin, how long they’ll last, or how steep the ultimate decline will be, history tells us that patience pays off handsomely for long-term investors.
Nevertheless, heightened volatility over short timelines can be surprising, if not downright unnerving. The 576 points the Nasdaq lost on Monday marked the eighth-largest single-session point drop in its storied history.
But just because Wall Street is exceptionally volatile and experiencing a steep sell-off, it doesn’t mean investors have to retreat to the sideline. Safe, time-tested businesses can help navigate investors through challenging periods on Wall Street, and potentially even grow their wealth.
What follows are five unstoppable stocks you can confidently buy right now to protect your principal and grow wealth during a period of historic volatility.
AT&T
The first no-brainer stock to buy during the Nasdaq sell-off is telecom titan AT&T (NYSE: T). Despite taking its fair share of lumps in recent years due to rising interest rates (telecom companies often lug around quite a bit of debt) and allegations from The Wall Street Journal that its lead-clad cables could be a health hazard, AT&T is well-positioned to succeed in the current economic climate.
From an operating perspective, it’s business as usual. Upgrading its network to support 5G download speeds has encouraged more high-margin data consumption. Likewise, AT&T has recorded 18 consecutive quarters with at least 200,000 net AT&T Fiber additions, which signals just how strong its residential broadband segment is at the moment.
We’ve also witnessed meaningful improvement in AT&T’s balance sheet flexibility. Since divesting WarnerMedia in April 2022, AT&T’s net debt has shrunk from $169 billion to $126.9 billion, as of June 30. The company’s 5.8% yield is perfectly safe.
Lastly, AT&T provides a basic need service. While consumers often reduce their discretionary spending during periods of economic/investment uncertainty, wireless service and internet access are rarely on the cut list. AT&T’s historically low postpaid churn rate of 0.7% speaks to its highly predictable operating cash flow.
AutoZone
My apologies to those of you without the ability to purchase fractional shares through your broker, but auto parts service chain AutoZone (NYSE: AZO) makes for a phenomenal buy during the Nasdaq sell-off. AutoZone ended the Aug. 6 trading session at nearly $3,120 per share!
The biggest catalyst working in AutoZone’s favor is that drivers are keeping their cars longer than ever before. S&P Global subsidiary S&P Global Mobility released a report in May that showed the average age of vehicles on U.S. roads has hit an all-time high of 12.6 years. People keeping their vehicles longer than ever almost certainly means a greater reliance on auto parts suppliers like AutoZone to keep their cars and trucks running smoothly.
AutoZone is also revamping its supply chain by building more than 200 mega hubs that’ll house up to 110,000 stock keeping units (SKUs). Locating these mega hubs throughout the country will ensure that its stores (and customers) will always have easy access to the parts they need.
Best of all, AutoZone offers one of the most robust share repurchase programs among publicly traded companies. Since initiating its buyback program in 1998, $36.3 billion of AutoZone stock has been repurchased, which has reduced its outstanding share count by 89%!
NextEra Energy
When the going gets tough on Wall Street, investors turn their attention to the highly predictable utilities sector. Leading electric utility stock NextEra Energy (NYSE: NEE) is the company that makes the most sense for investors to buy as the Nasdaq Composite falls.
The beauty of electricity is that it’s a necessity service. If you own or rent a home, you’re almost certainly going to need electricity to power your appliances and potentially your HVAC system. Since demand for electricity doesn’t change much from one year to the next, operating cash flow for utilities tends to be transparent and highly predictable.
What makes NextEra Energy unique is its laser focus on renewable forms of energy. It’s the global leader in capacity from wind and solar power, and generates around half of its 72 gigawatts of capacity from renewable sources. Although investing in clean-energy solutions hasn’t been cheap, the reward has been a significant reduction in electricity generation costs and a superior earnings growth rate among electric utility stocks.
The other half of NextEra’s operations are regulated. This oversight ensures that the company doesn’t deal with unpredictable wholesale pricing, which further adds to the consistency of its operating cash flow.
White Mountains Insurance Group
Unstoppable stocks don’t have to be brand-name companies. Despite flying under the radar, financial services company White Mountains Insurance Group (NYSE: WTM) continually makes its patient shareholders richer. Inclusive of its rather small dividend, White Mountains has delivered a greater than 7,900% total return to its shareholders since going public in 1985.
Though insurance is far from an exciting industry, it’s one that generally makes money in virtually any economic climate. White Mountains’ HG Global and BAM segments provide municipal bond insurance and reinsurance, while Ark/WM Outrigger offer property and casualty (P&C) insurance and reinsurance. Despite P&C catastrophe losses being unavoidable at times, insurers typically possess incredibly strong premium pricing power.
White Mountains Insurance Group is also considered a little bit of a mini Berkshire Hathaway. While it lacks the $300 billion portfolio that Warren Buffett oversees, it did end March with a $1.63 billion portfolio spread across various fixed maturity investments and common equity securities.
Returning capital to shareholders is also very important to White Mountains’ board. Over the trailing 10-year period, the company has reduced its outstanding share count by 57%. Moreover, its share count has fallen by 96% since peaking in the late 1980s. With White Mountain Insurance Group trading below its adjusted book value per share of $1,797, the time to pounce is now.
Johnson & Johnson
The fifth unstoppable stock to buy that can protect your principal and grow your wealth during the Nasdaq sell-off is healthcare conglomerate Johnson & Johnson (NYSE: JNJ), which is better known as “J&J.” J&J has raised its dividend for 62 consecutive years and is one of only two publicly traded companies to bear the highest possible credit rating from Standard & Poor’s.
Johnson & Johnson’s consistent growth in adjusted operating earnings — 35 consecutive years, leading up to the COVID-19 pandemic — is a reflection of the healthcare industry being highly defensive. Just because Wall Street has a bad day doesn’t mean people stop getting sick and requiring medical care. Regardless of how well the economy or stock market are performing, demand for prescription drugs and medical devices remains relatively steady.
J&J also benefits from almost unheard-of consistency in its C-Suite. Since its founding in 1886, the company has had just 10 CEOs, including current chief Joaquin Duato. When there’s little change at the top, it ensures that all growth initiatives and corporate strategies are being seen through from start to finish.
The final piece of the puzzle is Johnson & Johnson’s pharmaceutical segment. For more than a decade, management has shifted the company’s focus toward this considerably faster-growing, higher-margin operating division. J&J has demonstrated a willingness to aggressively invest in novel research, as well as collaborations, to fuel its pharmaceutical growth engine.
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Sean Williams has positions in AT&T and NextEra Energy. The Motley Fool has positions in and recommends Berkshire Hathaway, NextEra Energy, and S&P Global. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
Nasdaq Sell-Off: 5 Unstoppable Stocks to Buy That Can Protect Your Principal and Grow Your Wealth in an Unpredictable Market was originally published by The Motley Fool
