1 share I’d love to snap up in the next S&P 500 stock market crash

This writer reveals the world-class Nasdaq share that he’d most like to buy for his portfolio during a stock market meltdown.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Middle-aged white male courier delivering boxes to young black lady

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The S&P 500 is in full swing right now, having entered the third year of a bull market. But one thing history shows is that it’s just a matter of time before the stock market crashes again. It’s an inevitable part of investing.

To be clear, a correction is a drop of 10% from recent highs, while a crash is a decline of 20% or more. Neither is the end of the world. In fact, the second lesson from history is that the market has always eventually bounced back to scale new highs.

Therefore, I’d see a crash as a great time to do a bit of discounted shopping. And this is the one world-class S&P 500 share I’d like to buy more of during a market meltdown.

Should you invest £1,000 in Legal & General right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General made the list?

See the 6 stocks

Surgical robots

I’m thinking about Intuitive Surgical (NASDAQ: ISRG), the pioneer in robotic-assisted surgery. Its flagship da Vinci system helps surgeons perform minimally invasive procedures, which often lead to faster recovery times and shorter hospital stays.

Last year, 2.2m procedures were performed worldwide using da Vinci machines. And over 15m have now been performed over the past two decades.

In Q3, worldwide procedures grew approximately 18%, and the installed base grew to 9,539, an increase of 15% compared with Q3 2023. Revenue jumped 17% to $2.04bn, while net income rocketed 36% to $565m.

Powerful business model

What I like here is that the vast majority of Intuitive’s revenue is recurring (83% last year). You see, every surgery with the robots require specific instruments and accessories that need regular replacement, generating consistent sales.

And as more systems are installed, this creates a recurring-revenue flywheel, where more installed systems drive more demand for accessories and services. Replacement instruments and accessories contributed 62% of total revenue for Q3.

Plus, once the firm’s products are installed in hospitals and surgeons are trained on them, there are very high switching costs. In other words, highly skilled professionals comfortable with the da Vinci system are unlikely to want to switch. This gives Intuitive a wide competitive advantage (or moat).

What am I waiting for?

That all sounds great, so why wait for a big dip before buying more shares? Well, after surging by around 100% in the past year, the stock is very expensive. At $513, it’s trading on a price-to-earnings (P/E) ratio of 82.

While the stock is rarely ever cheap because of the firm’s dominant competitive position and high-quality revenue, that’s still very pricey. In fact, its above the five-year P/E average of 72.

Also, Intuitive isn’t without risk, as shareholders found out during the pandemic when many elective operations were postponed. Revenue took a hit and the stock dropped 35% in one month in early 2020.

Therefore, another global pandemic is a key risk, while the company faces increasing domestic competition in China.

Created with Highcharts 11.4.3Intuitive Surgical PriceZoom1M3M6MYTD1Y5Y10YALL28 Oct 201928 Oct 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

A bright future

Still, I’d love to own more shares (at the right price) for the long term. The company’s next-generation da Vinci 5 system offers improved 3D vision for greater surgical precision, and increased computing power and data-gathering capabilities, offering the potential for self-improvement.

Looking ahead, the global market for robotic surgery appears nowhere near saturation point. According to most estimates, it’s set to grow briskly at a compound annual rate of around 17% through to 2030.

Should you invest £1,000 in Legal & General right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Ben McPoland has positions in Intuitive Surgical. The Motley Fool UK has recommended Intuitive Surgical. 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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »