What is a bear market? A bear market is defined as a decline by more than 20% off the market’s highs, indicating the momentum has shifted significantly to the downside. This is bad news broadly. But for investors who consider investing as a business rather than a way to gamble, plenty of options are still available. You could buy put options. Or you can find long-term stocks to buy, stocks that can perform well when the stock market is declining.
Buying for the long term will make investing less stressful. Plus, remember that statistics are in favor of long-term rather than short-term, investing for generating profits.
What stocks should you buy for the long-term in a bear market? Focus on defensive stocks from three core defensive sectors: utilities, consumer staples and healthcare. These seven stocks in this article are from these three sectors. They’re often expected to pay consistent dividends and all have stable earnings, regardless of the economic conditions.
Sanderson Farms (NASDAQ:SAFM) is a poultry processing company, that “produces, processes, markets, and distributes fresh, frozen, and prepared chicken products in the United States.” The Mississippi company was founded in 1947.
The shares of Sanderson Farms trade at a price-earnings ratio (TTM) of 5.38, have a forward dividend yield of 0.8% and their five-year monthly beta of 0.64 should, in theory, make them rather stable compared to the S&P 500. This is holding true in 2022, as SAFM stock has gains of over 8% compared to the S&P 500’s losses of over 22%.
The company has consistent profitability and has rewarded its shareholders with massive net income growth of 1,508.54% in 2021, reaching $448.82 million.
United Natural Foods (NYSE:UNFI) specializes in grocery and non-food products in the United States and Canada. The company was founded in 1976.
The third-quarter FY2022 results were strong, as year-over-year net sales of $7.2 billion, showed an increase of 9.2%, and net income increased 39.6% to $67 million.
The big news is that the company updated its full-year outlook by increasing its projections for net sales, net income, EPS, and adjusted EBITDA. Net sales increased to a range of $28.8 billion to $29.1 billion from a previous range of $27.8 billion to $28.3 billion. The net income increased to a range of $230million to $245 million from a previous range of $221 million to $243 million.
The shares trade at a trailing P/E ratio of 9.32 and have a one-year target estimate of $53.10. A 38% potential upside in a bear stock market is very attractive.
Adecoagro (AGRO)
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Adecoagro (NYSE:AGRO) is an agro-industrial company that farms crops and other agricultural products, as well as making sugar, ethanol and energy production. The firm was founded in 2002.
Looking at AGRO stock’s performance in 2022, you would have difficulty believing we are in a bear market. The stock has gains of 17%, and a strong story.
For the first quarter of 2022, net sales of $201 million were 18.1% higher year-over-year and net income of $65.2 million meant gains of over 200% year-over-year. The company approved a cash dividend of $35 million to be paid in two installments, and the forward dividend yield is 1.6%.
The shares trade at a low P/E Ratio (TTM) of 5.8 and having a 1-year estimate target of $14.80. That would be an upside potential of 65%. The AGRO stock has a PEG GAAP (TTM) of 0.04, signaling it is undervalued.
BioNTech (BNTX)
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BioNTech (NASDAQ:BNTX) is a biotechnology company that focuses on cancer and other infectious diseases. The company was incorporated in 2008.
Readers of InvestorPlace may remember that I do not like biotech stocks in general, as most of them are too risky and too pricey. Some of them do not even generate sales. BioNTech, on the contrary, is a high-quality company. Its sales grew 352.40% in 2020, which is impressive. What is more impressive is the fact that in 2021 the revenue grew 3,979.40% to $22.43 billion.
The biotech company went from a net income of $17.33 million in 2020 to generate a massive net income of $12.17 billion in 2021, an increase of over 70,000%. Having generated a positive free cash flow of $900.91 million in 2021, there is definitely a great story in the financial performance of BioNTech.
Cross Country Healthcare (NASDAQ:CCRN) deals with healthcare staffing and workforce management. The company was founded in 1986.
The shares of Cross Country Healthcare are down 32% in 2022 and this is a price level to pay a lot of attention to if you’re looking for a rebound that has legs. An inflection point is 2021 as the firm reported sales growth of 100.46% to $1.68 billion and turned profitable. The net income growth in 2021 rose 1,118.38% to $132 million.
The one-year estimate target of $34.33 signals a lot of upside potential, 82% to be accurate. The trailing P/E ratio of 4.1x shows this is a cheap stock and the forward P/E (GAAP) of 3.96 is 83% lower than the healthcare sector median value.
At some point, the huge profitability in 2021 should fuel a strong rebound in the stock price.
NRG Energy (NRG)
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NRG Energy (NYSE:NRG) is an integrated power company in Texas. The firm was founded in 1989.
The bullish case for NRG stock is that profitability is exceptional. Back in 2017, the company had reported a net loss of $1.16 billion. But as of 2018 until 2021 NRG Energy not only has reported a net profit, but despite its volatile trend, it has gained a lot of traction. Soaring net income growth of 328.8% in 2021 is proof.
The firm generates consistently positive free cash flows, though they fell last year, and the stock offers a forward dividend yield of 3.6%. It is a good idea to earn passive income while the stock market tanks.
Most of the financial ratios for NRG stock are at a steep discount to the utilities sector median values. It is a deep-value stock to monitor and buy now at turbulent investing times.
Pampa Energía (PAM)
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Pampa Energía (NYSE:PAM) is an electricity company in Argentina. The firm was incorporated in 1945.
For the first quarter of 2022, the financial results were strong with a 28% year-on-year increase in sales of $412 million and an 11% year-on-year increase in the adjusted EBITDA of $226 million, while the consolidated profit was also increased year-over-year to $99 million, an increase of $66 million compared to the first quarter 2021.
The business is very strong, as sales growth increased over the past two consecutive years. In 2020 and 2021, sales growth was 18.66% and 88.4% respectively.
This is a company that delivers consistent profits. Investors will like the net income growth of 209.72% in 2021 to $30.82 billion. The firm is also a free-cash-flow generation machine over the past three consecutive years. The trailing GAAP PEG ratio of 0.04 is highly bullish for the PAM stock, signaling it is significantly undervalued.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
