Historically, there have been significant stock market crashes in September and October. While there isn’t a definitive pattern, these months have seen a fair few market meltdowns.
Here are a few notable examples:
- October 1929: the 1929 crash, often considered the start of the Great Depression
- October 1987: this month saw one of the largest one-day declines in history
- September 2008: the collapse of US bank Lehman Brothers triggered the Global Financial Crisis
Some market analysts currently warn of a bubble in artificial intelligence (AI) stocks due to their rapid surge. They suggest this bubble could pop, potentially causing a significant drop in most share prices.
While this is a possibility, it’s not certain that a market crash is imminent. In times of uncertainty, some investors turn to charts and data in search of solid answers.
However, the key takeaway, in my opinion, is that the stock market has always recovered from previous crashes. Moreover, some investors who went against the crowd during these downturns, buying shares when others were selling in fear, ended up making substantial profits.
If the stock market were to crash this year, I’d immediately start scooping up shares of this UK firm.
A world-class company
Despite not being a household name, RELX (LSE: REL) is one of Britain’s greatest success stories. It serves customers in over 180 countries, including most of the Fortune 500 companies.
The FTSE 100 stock is up more than 700% over the last 15 years. Over five years, it’s basically doubled, crushing the average Footsie return in the process.
The company is a leader in providing data and analytics services. Its high-quality, reliable information is critical for customers in sectors like law, healthcare, and finance.
Its LexisNexis database, for example, is widely used by lawyers, judges, and scholars for conducting in-depth legal research. It hosts over 138bn legal and news records, with over 2.2m new documents added daily from more than 50,000 sources.
Customers subscribe to these services, making the firm’s recurring revenue highly predictable. It’s a powerful business model that has seen revenue rise from £7.1bn in 2020 to a forecast £9.6bn this year.
A pricey stock
Clearly, a quality business with such competitive advantages as this deserves to trade for a premium valuation. It boasts very attractive profit margins.
However, the forward price-to-earnings (P/E) ratio is 30. For context, that’s a similar multiple to the ‘Magnificent 7’ group of AI stocks: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla.
A market crash would likely knock any froth straight off RELX’s valuation, making it more attractive to me.
Thriving in the age of AI
The company has been working on AI for years, but recently it’s created a suite of exciting generative AI tools from its vast databases of proprietary information.
Lexis+ AI is one example. This legal AI tool can go from blank page to arguments, contract clauses, and concise client communications in seconds. The time and money saved for customers should be enormous.
Crucially, Lexis+ AI delivers 100% hallucination-free linked legal citations due to the high-quality data it’s been trained on.
Naturally, the business could face rising competitive threats, especially in the disruptive age of AI. But as things stand, it tops my list of stocks to buy if the market crashes.
