Investors looking for a place to hide in the stock market have limited options. When markets selloff, correlations tend to rise, and great companies get thrown out with the genuinely risky ones.
That’s why a market selloff is a great opportunity for buying excellent companies at reasonable prices. Investors can further improve their odds by looking for companies that have a history of even holding up during bear markets.
There’s no telling if we’ve seen the furthest back stocks will drop to in this selloff. But we’ve likely seen the worst of the market volatility. That means investors should ignore the pain in their current portfolio and put cash to work in great companies.
One great company to buy during market fears is Walmart (WMT). The retailer is one of just two companies to close higher in 2008 during that massive market meltdown. Amid the latest fears of a recession, shares are holding up relatively well, down less than 5% from their 52-week highs.
The retailer has made significant inroads into e-commerce in recent years, but also has seen earnings surge 205%. That could help push shares higher, no matter what the market does.
Action to take: Investors may want to put a small stake here, and add to it on further market pullbacks. Walmart yields 1.2% and has a solid history of long-term dividend growth.
For traders, the December $70 calls, last trading for about $3.10, could see mid-double-digit returns as shares continue their long-term uptrend through the end of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.