Stock market crash alert: 3 must-buy retail stocks as prices fall

Investing in retail stocks can be a successful strategy in a volatile or stable market. These companies are necessary parts of the economy and the strongest brands own a dominant market share in their respective industries. Even if the economy is weakening, we all need to shop and purchase goods and products. Because these companies are so stable, their stocks tend to experience low volatility and in some cases even pay a quarterly dividend to shareholders.

In the event of a market crash or decline, retail stocks can provide a defensive hedge. These stocks tend to hold up better than other sectors such as technology. You may think they’re boring, but retail stocks can give your portfolio the protection it needs when things get ugly. These three stocks are worth adding as we approach a potential market collapse.

Lululemon Athletica (LULU)

Source: Sorbis / Shutterstock.com

Lululemon Athletica (NASDAQ:LULU) is a Canadian retail company that designs and sells sports and casual clothing. It was founded in Vancouver, British Columbia in 1998 and now has over 700 locations around the world. Wall Street analysts have an average price target for LULU of $466.11, which is more than 20% higher than the current share price.

This brand has achieved international recognition and popularity despite a somewhat checkered past. Lululemon first gained popularity with its yoga pants and has since added everything from winter jackets to running shoes. The company will have an international stage this summer when it designs the clothing and uniforms for Team Canada at the Paris Olympics.

Lululemon’s sales growth has been outstanding as the company has increased sales for 16 consecutive quarters. The company has a 10-year annual revenue growth rate of 20% and saw net income rise from $1 billion annually in 2014 to $1.6 billion in the last quarter alone. Despite the growth, the company trades at its lowest price-to-sales ratio in history at just 4.8 times sales.

Starbucks (SBUX)

Source: Grand Warszawski / Shutterstock.com

Starbucks (NASDAQ:SBUX) is an American multinational beverage company that operates in more than 80 different countries worldwide. The stock has been frustrating to own, and it has posted a loss of about 21% over the last 52 weeks. The share price is currently trading near its 52-week low and is at the bottom of analysts’ price target range. The average price target is $103.05, which is approximately $15.00 per share above the current price.

This brand has become synonymous with coffee and beverages. While the U.S. is Starbucks’ largest market, the company may be more popular abroad. Last year, Starbucks reached its milestone of 5,000 stores in Asia Pacific. The company recently opened its 400th store in India, a market where the company is expanding rapidly. In fact, Starbucks could see another wave of massive growth.

SBUX stock is trading at its lowest price-to-sales ratio in years at just 2.7 times sales and 22 times expected earnings. With SBUX you buy cheaply from a global company that is still expanding into new markets!

Onon Holdings (ONON)

Source: It for you / Shutterstock.com

More commonly known as “On”, Onon Holdings (NYSE:ONON) is a Swiss shoe company founded in 2010. After going public in September 2021, it is a relatively new stock to the US markets. Analysts’ price targets for ONON stock range from as low as $21.00 to as high as $52.84. The average target is $36.67.

While you may not be familiar with the company name, you’ve probably seen their unique running shoes. The patented design is called CloudTec, which led to the signature line being called On Cloud shoes. The shoe was so popular that Swiss tennis star Roger Federer became one of On’s first investors. Today, On is sold on every continent around the world and is the fourth largest footwear company in the world by market capitalization.

The stock has already had a good year in 2024, returning 22.5% to shareholders. For this reason, the multipliers have also increased. ONON trades at 10.7 times sales and 40 times expected earnings. Despite being an expensive stock, it has grown its revenue at a compound annual growth rate of 24% over the past three years. Long-term ONON investors will likely find themselves on Cloud 9!

At the time of publication, Ian Hartana and Vayun Chugh did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication policies.