And then some banks have come out saying that there’s going to be significant losses and it seems like that’s spooked the market so far, well it’s possible the market’s not going to fall that much from this news. There are some red flags out there that people are kind of worried about as being a potential catalyst for a stock market crash, and whenever you hear these type of worries coming from the overall market, i think it’s important to make a plan to kind of figure Out what you’re going to be doing if the market actually does fall, and i found an article from the motley fool i know some people have some mixed feelings about the motley fool, but it was an article talking about uh bulletproof stocks to buy if the market Does end up crashing so i’m going to be talking about the article kind of going over some of the main thoughts from the author, uh and then i’m going to give my own thoughts on these two stocks as being potential buys if the market does crash i’m Going to be coming out with a video in the next couple days talk about my favorite stocks to buy going into april, because i think there’s a lot of potential ways that the market could go and i think, it’s important to be prepared to take advantage. Whichever way the market goes because i think the nasdaq is still down so far this month, but the rest of the the s p, 500 and the dow jones, i think, are up like three percent overall, so there’s been a very unique month for the overall stock Market before getting into today’s video, i got to say that this is not financial advice and, if you’ve been enjoying these videos, i really appreciate if the like and subscribe button also help my channel out a lot so let’s first start with the with the article overall And the first stock that was mentioned in this video is going to be johnson and johnson.
Johnson johnson is one of the blue chip stocks that i associate with the medical field. These are companies, i think, of johnson johnson. I think of proctor and gamble they’re. Just so incredibly steady and one of the main reasons why it’s so attractive has to do with their dividend. But we’ll talk about that in a sec, so the company’s been around for nearly 140 years and is the leading developer for a broad range of consumer products. Medical devices and pharmaceutical drugs and therapies one of the draws to investors. This article mentions that their dividend yield currently sits around 2.5 and it’s a dividend king, meaning that they’ve raised their dividend every year for at least the past 50 years. They say, despite economic hardships. Over the past year, johnson johnson reported a 1.3 percent sales growth on operational basis propelled by an eight percent year over year sales growth in the final three months of 2020.. Another reason why j has had increased investor interest recently has to do with their vaccine. The u.s food and drug administration authorized a single shot vaccine for emergency use on february 27th. Johnson johnson is currently working toward its goal of 100 million doses in the us by the middle of the year. The companies say that they will not be making a profit from the doses distributed under the emergency youth authorization that doesn’t mean johnson and johnson won’t, see any financial benefit from the vaccine over the long term.
So let’s talk about johnson johnson because for some reason one i look on the investing youtube channels that i kind of follow to see what people are talking about. There’S, never a lot of discussion about dividend stocks overall, because i think dividends are not as sexy. As you know, these multi baggers this stock is going to double in the next week type of stock, so johnson johnson has been one of these stocks. That has always been on my radar, but i’ve never really pulled a trigger on it. So i want to talk about some of the things i see with johnson and johnson. That makes it attractive for a long term investment, especially if the market falls so currently, johnson. Johnson is trading for 166 dollars and it’s up around six percent on the year. So, even though the overall market, i guess for the nasdaq for the the tech stocks, that a lot of people are very interested in, are down. Johnson johnson has been relatively stable and is up on the year going back to a number that i talked about in the last video for measuring volatility for an overall stock johnson johnson has a beta of 0.71. What this means is the beta of one would mean that for every one percent, the s p 500 moves. You would expect this stock to move one percent as well, so meaning the johnson johnson. If the s p 500 goes up by one percent, you expect johnson and johnson to go up by 0.
71 percent and you might be wondering why would you want a stock that has a lower beta that’s not going to be doing as well as the overall market? If the stock market goes up and the whole idea is that it works the opposite way if the market does fall and the s p 500 falls by one percent, johnson johnson is going to be relatively stable. I guess in comparison and it will go down. 0.71 percent, on average so that’s the idea of having a low beta type stock, because for a time that, maybe, if you think the market’s going to fall low beta stocks are a great way to limit the volatility of your overall portfolio and even though the stock, Maybe doesn’t go up as much on average as the s p 500. When you look at the returns that the companies had since 1995 they’ve actually been outperforming the overall market with returns of 11.7 percent, one of the main reasons why the company is actually outperforming the overall market has to do with the good old dividend. So, as the article mentioned has a dividend yield of 2.5, which is pretty good and is better than the overall average of the s p 500, which i think is sitting around like 1.3 uh, 1.25 percent and they’ve raised that dividend every year. For the past 58 years mean that they are a dividend, king and dividends are not the most exciting thing to be investing in, but if you’re looking for ways to limit your downside risk, i think dividends are a great thing to look at, because when the overall Market’S going up significantly, yes, the growth stocks are the ways to be making money.
But for someone like myself, i like having constant income and for myself recently that’s been selling options, but another way to bring in reliable income has to do with with dividend stocks and having a dividend. Yield of 2.5 percent means that, even if the stock falls overall like if the market has a pretty significant correction, you’re still going to be making additional income which can be used to reinvest into the company or to invest it into other places. That you see. As being a better opportunity, so i like having the flexibility of having dividend stocks. Dividends are not something that i use a lot in my portfolio but i’m starting to warm up to the idea of using them more, especially as we’ve been seeing. Uh increased levels of volatility in the overall market, here’s, what the all time chart looks like for johnson and johnson, and from that last video i talked about a new type of chart that i’m going to be using pretty much from now on when i’m. Looking at the all time, chart and that’s going to be, the logarithmic chart also called the log chart. The whole idea is that every interval that you see on the y axis is a is the same percent, so the difference between one and two is going to be the same difference as 100 to 200, so it’s all about percentages and when you’re looking at a Long term chart it can be very skewed towards the recent moves to the upside, especially if the stock has gone up significantly in the all time chart.
So this is the log chart and you can see that it’s been very stable over the past decade, plus and that’s. What we’re? Looking for when i’m looking for ways to protect myself, if the market crashes so let’s talk about the recent earnings report and news that have been moving the stock, their last report came out on january 26, where they beat expectations across the board, and there was some Mention about vaccine data that was going to be coming out in the upcoming weeks. Since that point, the vaccine has been approved in the u.s, canada and europe. So this is a nice move, especially considering that it is a one dose vaccine and while it may not be as effective as maybe the pfizer vaccine, where the numbers are in the 90s, the whole idea of having a one shot vaccine means that it’s going to Be easier to roll out to especially rural communities, where there’s, a real worry about the ability to get two doses out there, especially with the refrigeration and the temperature requirements for the vaccine. So this one dose vaccine will be very interesting for where they’re going to be using it, and hopefully things will get back to normal eventually. But this is a step in the right direction and having a one dose vaccine is very attractive for stuff, like that in their previous report for quarter three, they beat expectations and raise their guidance in looking at their business.
They have three main sections of their business. They have pharmaceuticals, consumer products and medical devices, and when i look at a company that maybe i don’t have as much experience with i look for where are they making money and has it been growing over time when you look at their revenue change over the past Year, they’ve had a two percent growth for consumer health, a 14.6 growth for pharmaceuticals and a 2.2 drop in medical devices. Whenever i see a section of the business that’s dropped on revenue over the past year, i want to kind of understand why it’s been going down, because when you look at a stock chart yeah, you want to see constant growth, but i think it’s more important to Understand when things don’t go well, how are they going to be able to be fixed, and when you look at the medical devices, it makes sense pretty much across the board when it comes to companies that are selling medical devices, a lot of the elective surgeries have Been pushed off because of obviously the pandemic that just doesn’t make sense to be doing elective procedures when there’s more important things to be done in hospitals and so that it kind of explains the two percent drop in medical devices. Also, hospitals have been investing heavily into ways to combat the pandemic and so they’re not really investing in some of the devices that would be used for elective surgery. So that is a number that’s down in the past year, but i expect that to bounce back once the pandemic finally ends and some of these elective procedures that i’ve been kind of stacking up for the past year.
Finally, get done so here’s a breakdown of their consumer health because obviously consumer products it’s just such a wide category or an umbrella term. So you have over the counter. You have skin care, slash beauty, you have baby care, women’s health and wound care, and you can see the distribution of the revenue for that consumer product group. So, overall, i think johnson johnson is a very interesting stock to look at if you think that the market’s going to be falling overall, i personally don’t love investing in the medical field, because i it’s my personal opinion that i don’t think for profit. Healthcare should be a thing, but if that’s something you’re interested in, i think johnson johnson could be a very interesting way to lower the overall volatility in a portfolio. So now let’s move on to the second stock of the video which is going to be microsoft and since we’re talking about microsoft, i will disclose. I do own shares of microsoft and let’s get right into it. So tech giant microsoft is an oldie, but a goodie in the world of value stocks, it’s microsoft’s, exceptional pattern of growth and resilience in all market conditions that should get investors really excited and the company’s fiscal 2020 that ended on june 30th. Revenues and operating income grew respectively by 14 and 23, and net income was up 13 on a year over year basis. Microsoft is in a solid position in terms of its cash to debt ratio.
Another key indicator of balance sheet strength. The company holds roughly 132 billion in total cash and cash equivalents, as opposed to 67.5 billion and current liabilities due within the next year. When you think of companies that have the like, the really nice balance sheets that you look at you’re like not really worried about anything, i think about microsoft and apple, specifically, so it’s really hard to look at microsoft and point out stuff that you don’t like, but Let’S talk about some of the things that kind of stick out to me when it comes to microsoft. This is one of the most stable companies on the planet. When we talk about beta, which is the relative volatility compared to the s p 500, it does have a value of 0.8, meaning that it’s one of my favorite stocks to buy if the overall market crashes. This is something that i bought during the pandemic. I guess a full year ago and since 1995 the stock is seen an annualized return of 17.7 percent compared to the uh just shy of 10. The s p 500 is returned, so this has been a great place to invest over the past decades. At this point, and while the company doesn’t have a dividend that is in line with something like johnson johnson, that was sitting around, i think was 2.5 or 3 percent. The dividend yield is 0.95, which is basically free money, especially considering the company has been outperforming the overall market, even without that dividend, and so here’s, the all time, trade of microsoft, with a decent dip during the dot com bubble and here’s the log chart.
That shows how incredibly stable the company’s been and they’ve been seeing impressive growth during that time. During the last earnings report, which is at the end of january, they saw impressive view over year, growth in revenue, operating income, net income and diluted earnings per share. One of my favorite things when you look at microsoft has to do with their even distribution of revenue between their major sections of their business. So let’s talk about that because there are three sections are productivity and business cloud and personal computing. They just have such a nice spread of revenue sources that any time one of the parts of their business struggles, usually the other ones kind of bounce. Back in the past couple quarters, it’s been the cloud part of their business. That’S really been pushing up the significant growth for the company and in the past quarter the company has returned 10 billion dollars to shareholders, which is an 18 increase year over year. Microsoft has been a part of my portfolio for a long time and anytime. I see it fall, especially if the overall market’s falling. I see that as being a fantastic buying opportunity to add a incredibly valuable company to my overall portfolio. That does not go on discount very often so when i talk about stocks that i always want to buy at a discount apple and microsoft are the two ones that i immediately think of. Yes, are not the most sexy companies to buy overall they’re, not stuff that’s, going to double in the next couple months.
But when you have market volatility, i think it’s great to kind of shore up your positions and buy into stocks that maybe you haven’t added to your portfolio in a long time, so very curious to see what you guys had to say about this article.