As I noted in a recent article, some investment analysts and market commentators are becoming concerned that a stock market crash is just around the corner. While I always take these projections with a pinch of salt, I’ve been looking for some of the best shares to buy now to navigate a potential slump.
I’m looking for stocks that have the potential to perform in both bull and bear markets. To put it another way, I’m not going to bet everything on one outcome.
When I say I’ve been looking for the best shares to buy now, I mean I’ve been focusing on high-quality stocks. These include companies like Reckitt, Games Workshop and Computacenter.
The best shares to buy now
There’s a simple reason why I’d focus on these companies over other opportunities. No matter what happens in the stock market, people will still be buying cleaning products, tabletop models and require help setting up IT infrastructure.
A stock market crash might have a small impact on the demand for these products and services. Still, I’m willing to bet people won’t stop cleaning their homes because the stock market slumps.
That’s why I think these are some of the best shares to buy now. I already own Reckitt and would also buy Games Workshop as well as Computacenter for added diversification.
Another company I’d buy to provide some protection against a stock market crash is CMC Markets. This financial services corporation makes money when investors bet on the stock market using its platforms. In periods of high volatility, trading activity on its platforms tends to increase. This can lead to higher profits. But remember, the opposite can happen when activity calms.
Stock market crash protection
Another opportunity is BHP. The prices of commodities such as iron ore and copper tend to move independently of stock markets. With governments around the world set to spend millions of pounds over the next few years on infrastructure projects, demand for these commodities will dramatically increase. As such, I think BHP’s profits will grow, no matter what happens to equity markets in the meantime. That’s why I’d buy the company for my portfolio.
Unfortunately, while I believe these are some of the best shares to buy now ahead of a stock market crash, they have their own challenges. Companies like Reckitt and Games Workshop have to deal with rising costs, which could eat into profit margins. Computacenter and CMC may also have to deal with higher wages, which could impact growth. And while BHP might be earning windfall profits from high commodity prices today, there’s no guarantee prices will remain elevated indefinitely.
Despite these risks, I think these five companies could help protect my portfolio against the stock market crash. That’s why I’d buy all of them today.
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Rupert Hargreaves owns shares of Reckitt plc. The Motley Fool UK owns shares of and has recommended Games Workshop. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.