With global financial indices in decline and panic mounting over the coronavirus outbreak, you’d be forgiven for thinking a market crash may be on the cards. While I’ve no crystal ball to see into the future, I think it’s wise to prepare.
Warren Buffett, the billionaire chairman of Berkshire Hathaway, has said he won’t be selling off stocks during the coronavirus outbreak. He stands by his advice to keep a long-term outlook and not be frightened into making bad decisions in the short term. I completely agree with his outlook. However, if a market crash happens, there are certain stocks I think are worth buying.
Leading UK petcare business, Pets at Home Group (LSE: PETS) posted a positive fourth-quarter trading update last month when it reported total revenue growth of 7.9% to £255.9m.
The Pets at Home share price has risen 6% year-to-date and 109% in the past year. There’s no doubt this company has a solid business model and has captured a loyal customer base through its range of products, ease of purchase and competitive pricing.
However, I feel this success is already priced into its share price and its price-to-earnings ratio (P/E) of 33 reflects that.
Profiting from pets
In a dire UK retail market, Pets at Home is one of the few companies that stands head and shoulders above the rest, excelling with confidence. It’s committed to rolling out one-stop care shops where customers and their pets can experience an all-in-one pet offering like no other. This includes free nutrition consultations and children’s workshops, as well as grooming, puppy training, animal welfare workshops and veterinary clinics within the stores.
Pets at Home has a £1.6bn market cap, earnings per share of 10p and its dividend yield is 2.5%. This is one stock I’d be tempted to buy in a market crash or recession. People love their pets and no matter what state the economy is in, that fact won’t change.
Equity in equities
The London Stock Exchange Group (LSE: LSE) is home to the main financial hub for UK equity trading, but it also owns stock exchanges abroad. In addition, it has several key clearing houses across Europe.
The London Stock Exchange share price has risen 7.2% year-to-date and 87% in the past year.
It continues to press ahead with its $27bn acquisition of Refinitiv, which will give it access to major financial data, possibly enough to rival Bloomberg. Refinitiv which is jointly owned by The Blackstone Group and Thomson Reuters Corporation, has 40,000 institutional clients counting daily foreign exchange (FX) trades of $400bn along with fixed income trades of $600bn.
The LSE share price has risen over 1,000% in a decade, which goes to show how well it’s established itself in the league of quality shares to own.
With a P/E of over 60, I think it’s hard to justify buying it at today’s prices, but with such a prominent position in the world’s financial markets, I think it will continue to thrive and wouldn’t hesitate to snap up shares in this stock during a market crash.
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Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.