The stock market has ripped higher this month to fresh all-time highs. Even though this could keep going, some investors do start to fret that a crash is still coming. Some cite escalating geopolitical tensions around the world, along with concerns that interest rates might not be cut this summer as most are planning for. Even though this isn’t my core view, I’ve got two stocks on my watchlist that I think would be great shares to buy during a crash.
Too lofty right now
The first one might not be a big surprise for many. Rolls-Royce (LSE:RR) shares have jumped by 183% over the past year. With the share price currently above 400p, I simply can’t justify buying at the moment. The valuation looks stretched and I struggle to see a massive move higher in the coming year.
Yet when I consider what has driven the move, it does make sense. The business has done a complete 180-degree turn from the struggling pandemic company of 2021. It is making good ground in the power generation division. Further, the civil aerospace profit margins are really starting to recover. This was one of the areas that was hit the hardest during the pandemic. Yet for 2023, the operating profit margin was 11.6%, up from 2.5% from the year before.
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Of course, a risk is that the bulk of the turnaround has now happened. This could mean that financial performance going forward stalls, instead of increasing further.
Based on the fundamentals, I like the stock. Therefore, if we did see the share price swiftly drop by a significant amount, this is one of the companies I’d certainly look to snap up.
A steady income option
The other stock on my watchlist is the Supermarket Income REIT (LSE:SUPR). The real estate investment trust does what it says on the tin. Namely, it invests in a diversified portfolio of supermarket real estate assets in the UK. The income reaped from leasing these assets out means that it can pay shareholders dividends along the way.
The share price is down 14% over the past year. REITs have struggled due to high interest rates making it expensive to finance new purchases. Further, demand from new tenants is lower as a result of the cost-of-living crisis.
Even though these are risks going forward, I think the REIT could slot into my income portfolio quite nicely. After all, the current dividend yield is 8.03%.
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For investors that don’t have any income stocks, I think this is a great option to consider buying now. Given that I already have enough income stocks in my portfolio, I’d only look to add this if it became a real bargain, such as during a market crash. The lower share price would act to push up the dividend yield, making it even higher. At that point, I’d look to step in and purchase.
