Here is one of my best shares to buy now for my portfolio is there is another stock market crash.
Stock market crash in 2021?
A stock market crash is a rapid decline in stock market prices. A market crash is generally understood to mean that prices of stocks in major indexes across the world drop by double-digit percentage points in a matter of days or weeks.
A crash can happen for a variety of reasons. These include bad economic news, political events, or world disasters. An example of the latter was the Covid-19 pandemic, which caused a worldwide market crash last year.
The Covid-19 pandemic is not over and the world is still recovering from an economic, political, and humanitarian perspective. I must note that no one can accurately predict if another stock market crash will occur. I believe the economic damage caused by the last crash could lead to another.
One of my best shares to buy now
If there were to be another market crash, I have identified one stock I would be looking at. I believe the share price would drop offering me a bargain. I believe the share price would rise again, in time, and the firm’s performance would remain robust. This pick for my portfolio is based on a crash related to the pandemic and restrictions coming into force once more.
Learning Technologies Group (LSE:LTG) were already established in providing e-learning and training services to businesses prior to the first crash. Services have been in demand more than ever due to offices needing remote working. I believe tech stocks would have defensive attributes in this crash scenario and LTG could benefit.
As I write, shares in LTG are trading for 216p per share. This is a 68% increase on prices this time last year at 128p per share. It is currently trading at all-time highs.
In the most recent half-year results announced last week, LTG reported an increase in revenue and net income. More importantly for me, it confirmed a hike in demand and international footprint. I believe these trends could accelerate if the market crashed again for a similar reason. That’s why I have identified it as one of my best shares to buy if there’s another crash.
Risk and reward
Firstly, the risk of the pandemic causing further economic issues for firms means they may not prioritise training as the purse strings need to be tightened. This could affect LTG’s bottom line.
In addition, LTG has a track record for acquisitions which I usually like in a firm. However, it could over-extend itself. When an acquisition takes place there is a proportion of goodwill to total assets. In simple terms, this is the premium paid when acquiring another business. If there is a large portion of goodwill, this could indicate the acquisition is costing too much.
Overall, if the market were to crash in 2021, LTG is one of the best shares I would be looking at picking up cheap for my portfolio. I believe the reward would outweigh the risk involved.
Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Learning Technologies. 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.