To say that the stock market has returned from its March lows with a vengeance would be a massive understatement. As of July 28, the S&P 500 remained stable throughout the year and was 47% higher than where it bottomed out in late March, a notable rebound in just a few months.
However, that does not mean that we are still out of danger. The COVID-19 pandemic is still progressing to alarming levels, and things could get worse before improving. Just to name a few hypothetical scenarios, state governments in the hardest hit areas could choose to shut down their economies to curb the spread of the virus, and unemployment could stay in the double digits until well into 2021. Economic activity has been largely driven for government support, and Congress may have trouble agreeing on any other stimulus. And the market is assuming that a vaccine will be ready by the end of 2020 or early next year, although this certainly seems likely, it is not a fact.
The point is that the market could certainly collapse again before the pandemic ends. And two shares to own if you do are Walt disney (NYSE: DIS) and Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). Here’s why these companies are well positioned to overcome any difficult times, and are also ready to prosper if the economy recovers quickly.
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A stock for recovery and the times to stay home
Disney has obviously been a victim of the COVID-19 pandemic in several ways. Its cash cow theme parks closed as the pandemic worsened, and although Walt Disney World has reopened, crowds are limited and not likely to reach a level close to its typical income level. Also, Disney’s cruise line remains closed, and there’s no way to know for sure when theaters will reopen on a grand scale.
With that said, Disney brands are powerful enough to weather tough times. When the pandemic ends, demand for theme parks will be stronger than ever. The numerous Disney movie franchises are likely to bring billions into the box office once again. And at some point, Disney cruises will sail again.
Meanwhile, the pandemic has rocked Disney’s young streaming business. The company had set an (apparently ambitious) target of 60-90 million subscribers by 2024. Well, there were 54.5 million as of May 4 of this year. It is entirely possible that Disney has reached its 2024 goal. this year.
Simply put, Disney has enough liquidity to get through tough times, and in the meantime, it’s doing a great job of generating a massive stream of recurring revenue. At approximately 20% less than the year started, Disney is a property that it owns no matter how the rest of the pandemic unfolds.
Buffett is finally putting money to work
Investors have been disappointed with Berkshire Hathaway CEO Warren Buffett’s lack of investment action for years as the company’s cash accumulation grew to $ 137 billion at the end of the third quarter. And it makes sense: This is more than a quarter of Berkshire’s market cap that was being generated with virtually no profit.
However, this appears to have recently changed. Berkshire’s recent acquisition of Of the domain (NYSE: D) natural gas assets and the purchase of another $ 1.2 billion in Bank of America (NYSE: BAC) The actions show that Buffett and his team can finally see the compelling opportunities they were waiting for.
If the market falls again, it could open the door to more investment opportunities. And with a collection of primarily recession-resistant businesses like GEICO and its numerous utility operations, Berkshire is well positioned to stay profitable no matter what the stock market or the economy does.
Two excellent long-term investments
To summarize, Disney and Berkshire are two stocks that work well during good times and can also allow you to sleep soundly at night knowing that if the stock market crashes again, they are relatively safe stocks that should overcome the turbulence in one piece.
