Key Points
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Apple’s loyal customer base and attractive growth avenues make the stock worth holding through a market crash and beyond.
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Coca-Cola has a rock-solid business, a superior dividend program, and a massive remaining white space in its industry.
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Will there be a market crash within the next year or so? It’s hard to say. On the one hand, geopolitical and macroeconomic tensions are affecting broader equities. Things may intensify in the coming months and eventually lead to a full-blown bear market. On the other hand, it’s hard to predict these things, and for all we know, these tensions will subside soon enough and not cause significantly more damage to the economy and equity markets.
However, whatever happens over the next 12 months, it’s important to keep in mind that holding shares of excellent companies over the long term remains a great way to earn substantial returns. Warren Buffett, perhaps the greatest investor of all time, famously has a preference for a “forever” holding period, and several of his favorite stocks are precisely the kind that can navigate market crashes and perform well thereafter. Let’s consider two of them: Apple (NASDAQ:AAPL) and Coca-Cola (NYSE:KO).
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1. Apple
At first glance, Apple may not look like a particularly attractive stock to own during a market downturn, especially if it is caused by economic problems. The company’s devices are famously expensive, and they are exactly the kind of thing people can afford to stop buying when the going gets tight. A new iPhone is hardly a necessity, especially when grocery and oil prices are rising. However, Apple has a resilient business that tends to perform relatively well, even during challenging economic times.
The company owes that in part to its large, loyal customer base, many of whom renew their iPhones every few years. So if a market downturn is on the way, investors can stick with Apple. The tech leader won’t escape entirely unscathed, but it could navigate the storm and emerge in one piece, ready to tap into several lucrative opportunities.
For instance, Apple boasts an installed base of more than 2.5 billion active devices, but it has just 1.5 billion paid subscriptions. True, some people own multiple Apple devices, and some subscriptions sometimes cover multiple services. Still, there is an opportunity for Apple to improve its monetization. It’s something management itself has pointed to as a potential opportunity. Apple could also launch new services to appeal to a growing subscriber base while expanding its installed base by introducing new, differentiated devices.
The company is working on those projects. Apple is increasingly incorporating artificial intelligence features into its devices, while the company is reportedly planning to release a foldable iPhone, a niche that has yet to see Apple make its mark. Apple also generates significant free cash flow to reinvest in the business and to distribute to shareholders via dividends and share buybacks, something the company does regularly. Apple’s shares recently dropped after its latest earnings update due to poor guidance.
However, investors focused on the long game should look beyond these short-term swings. The stock still has strong long-term prospects and is worth holding onto regardless of whether a bear market develops soon.
2. Coca-Cola
Coca-Cola, a leading consumer staples company, is a great stock to own in a market crash. Here are three reasons why. First, it belongs to a defensive industry that fares better than most others during economic downturns. Second, Coca-Cola has a robust business. The company boasts a large portfolio of beverages across many categories, including some leading brands within certain niches.
Third, Coca-Cola is an outstanding dividend stock. The company is a Dividend King — those are businesses with at least 50 consecutive years of payout increases; Coca-Cola’s streak is 64. The beverage leader’s dividend program provides further evidence of the resilience of its underlying operations. Also, the regular payouts can help smooth out market losses during a downturn.
All of these qualities explain why Buffett’s Berkshire Hathaway (NYSE:BRKA) (NYSE:BRKB) has owned Coca-Cola for decades. But can Coca-Cola still post strong long-term returns? In my view, the answer is yes.
Coca-Cola has performed well over the long run, partly thanks to its ability to innovate. The company’s beverage portfolio has evolved with consumers’ changing tastes and preferences. Coca-Cola routinely launches new products (or at least new takes on old ones). Legacy brands still matter even more and continue to attract many consumers and generate significant revenue.
Coca-Cola estimated that it accounted for 2.2 billion of about 65 billion daily beverage servings in 2025. That leaves plenty of white space for the company to exploit, and it can post stronger financial results through a strategy that includes raising prices on particularly popular brands, launching new products in certain geographies, etc. Coca-Cola doesn’t have the most exciting business, but its resilience, lucrative prospects, and outstanding dividend program all make the stock a buy for long-term investors.
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Prosper Junior Bakiny has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
