In general, I’m not a fan of waiting for share prices to fall before buying stocks. But there are a few names I’m interested in that are just a bit too expensive for me at the moment.
I’m very keen to add them all to my portfolio, but buying at the wrong price is always a bad idea. So a stock market crash – or something of that sort – could be just what I’m looking for.
Experian
There aren’t many FTSE 100 stocks that I think are genuinely expensive right now. But Experian (LSE:EXPN) is one of them – and there are good reasons why this is the case.
The business is incredibly difficult to disrupt. Its credit scores are drawn from databases that are virtually impossible for new competitors into the industry to replicate.
On top of this, it sells a product to mortgage lenders that costs a fraction of the risk it helps protect against. That’s an incredibly strong position to be in.
There have been concerns that Fair Isaac Corp might try to bypass the firm by going direct to lenders. That’s a risk that I think is serious at today’s prices but could be less so at lower ones.
Porvair
Porvair (LSE:PRV) is a stock I used to own, but I sold it when I thought it got too expensive. The firm makes filtration products that are used in laboratories and aircraft.
The latter has been absolutely flying recently – no pun intended. And that means the risk of a cyclical downturn (that’s naturally present in both markets) is unusually high right now.
What really stands out, though, is that both markets are heavily regulated. This creates a significant barrier to entry for competitors and helps Porvair generate strong recurring sales.
With a market value of £373m, the stock is one a many investors might not have on their radars. But I think they should consider taking a closer look before the next market crash.
Danaher
Danaher (NYSE:DHR) is an odd S&P 500 stock. Despite being firmly out-of-favour with the market at the moment, it still trades at some relatively high multiples.
The firm is a US supplier of life sciences equipment. And it’s built a strong position by acquiring other businesses and helping make them more efficient.
Despite the industry being under pressure recently, Danaher shares have only faltered slightly. That’s actually quite impressive for a stock trading at a price-to-earnings (P/E) ratio of 46.
Regulation is a risk in this industry and this is playing out at the moment. So while I want to own the stock very much, I find it hard to justify paying today’s prices.
Crash opportunities
As I see it, investing is about balancing two things. One is being on the lookout for buying opportunities and the other is being disciplined about valuations.
I think almost every stock comes to trade at a bargain price at some time or other. And a stock market crash is the kind of thing that can make this happen.
With that in mind, I think it’s a good move to have a set of ideas about which stocks to buy ready for when prices fall. And Experian, Porvair, and Danaher are three from my list.
