The stock markets have come a long way since last year. So far in November, the FTSE 100 index is up almost 18% from this time last year. I believe it can rise more. But, as an investor I am also careful to consider what might go wrong. Withdrawal of liquidity, rising prices, and high indebtedness among companies could impact stock markets. And if we throw persisting pandemic worries into this mix as well, I expect that we could see another stock market crash.
But a crash, as we now know from last year’s experience, is not a time to run for cover. It is an opportunity. And as legendary investor Warren Buffett has famously said, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”. Many FTSE 100 stocks bought during last year’s stock market crash would have given me great returns if I had bought them then. So if another market crash comes by, I already have three stocks on my list.
Croda International: high performance, high price
Speciality chemicals company Croda International is one of the stocks on my list. In the last one year alone, the company’s share price has risen by over 60% and in the last three years, it has more than doubled. Its prospects are good too. It actually increased its sales guidance for the current year. It is little wonder that its relative price, as measured by the price-to-earnings (P/E) ratio at 55 times, is among the highest for FTSE 100 stocks. Going by this, I am not certain how much upside there is to the stock in the foreseeable future. But if a stock market crash were to happen, I would definitely buy the stock.
Halma: stock market crash proof
Another FTSE 100 stock for me to buy is Halma, the provider of safety equipment that has a range of uses including detection of flammable gases, elevator safety systems, and water quality testing. The stock has risen by 41% since last November, even though it was quick to bounce back from last year’s stock market crash. By May last year, it was already trading at levels higher than before the pandemic. The company is also financially healthy and has a long history of share price increases. However, with its current P/E of 45 times, I am not sure if it is a good buy right now. In a market crash, however, it could be at far more attractive levels.
AstraZeneca: FTSE 100 household name
Lastly, I like the pharmaceuticals biggie AstraZeneca, which has become a household name thanks to the pandemic. The Covid-19 vaccine manufacturer has always been a relatively high-priced stock. It is a robust organisation that, like Halma and Croda International, has a history of rewarding investors with capital gains. Its present P/E ranges between 45 times and 89 times depending on the data source I consider. But even the lowest estimated P/E is quite high in my opinion. I already hold the stock, but in a market crash, I would buy more of it.
