3 shares I’d buy in a stock market crash

Christopher Ruane reveals three UK shares on his watchlist he would consider buying for his portfolio during a stock market crash.

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.

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 markets have been nervous lately. Everything from vaccine resistance worries to US monetary policy has been feeding into a jittery stock market on both sides of the pond. As an investor, I think a stock market crash could present me with a good buying opportunity. I don’t know if the stock market will tumble any time soon, but I am prepared in case.

Here are three shares on my watchlist I will consider buying if they slump during a stock market crash.

Yield on sale

One of the highest yielding FTSE 100 shares is British American Tobacco. Currently the dividend yield is 8.0%. On top of that, the company has an attractive record of raising its dividend. It has done so every year this century.

No dividend is ever guaranteed, however. Risks include a large debt pile, and declining cigarette use in many markets. That could hurt both profits and revenues. On the bullish side, I like the company’s massive cash flows, which are helpful in supporting the dividend.

As last year showed, an economic downturn isn’t necessarily very damaging to the company’s sales. So, if the shares are marked down as part of a wider stock market crash, I would consider adding to my position.

Financial services pick

Even at the current share price, insurer Legal & General yield 6.7%. But that’s after the share price rose 15% over the past 12 months. In fact, it’s 48% higher than the lows it touched during that period.

If I had managed to buy the shares then, at 176p, I would now be looking at a double-digit yield. Market timing is difficult, and it’s impossible to call a bottom with any certainty. But I will be keeping an eye on the Legal & General share price in the event of any stock market crash, in case an attractive entry point opens up.

With a strong brand, and buoyant customer demand, I see continued bright prospects for Legal & General. But one risk is pricing competition in the insurance market, which could eat into profit margins.

Stock market crash and Howdens Joinery

I like the Howdens Joinery business as I think demand for timber and similar products should remain strong for years to come. The chain sells items which help housing construction, but also renovation. So it could continue to do well even if new housebuilding slows down. However, the Howdens Joinery share price has increased 75% in the past year. It is not nearly as cheap as it once was.

That is why I will be keeping an eye on the Howdens Joinery share price in the event of any stock market crash. If it tumbles to the sort of price it stood at on some days last year, I would consider adding it to my portfolio. However, one risk here is that any economic downturn that sends the stock market crashing could also lead to a tightening in consumer spending on household renovation. That could hurt sales at Howdens. 

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.

Christopher Ruane owns shares in British American Tobacco. The Motley Fool UK has recommended British American Tobacco and Howden Joinery Group. 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.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »