Markets have been volatile each of the past two years, with investors experiencing at least a 10% correction followed by a strong rebound. Volatility remains a threat to markets as geopolitical tensions heat up, government deficits balloon, and consumers continue to bear the burden of higher prices.
This backdrop, coupled with an elevated cyclically adjusted price-to-earnings (CAPE) ratio, could set us up for another correction. If the market were to dive from here, it would be a good idea to have a list of stocks that you would like to buy.
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If this were to happen, here are three no-brainer financial stocks I would scoop up in a heartbeat.
Berkshire Hathaway continues sitting on a massive cash stockpile
Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) is a massive conglomerate under new leadership with CEO Greg Abel. Abel has huge shoes to fill, and many investors are wondering: Can he build on Warren Buffett’s long-term success?
Buffett, along with longtime business partner Charlie Munger, built Berkshire into a massive conglomerate with businesses across a variety of industries. This makes Berkshire Hathaway a cash-generating machine, and its cash stockpile keeps growing.
In the last year, Berkshire has earned nearly $24 billion in free cash flow. At the same time, it has been paring down its investment portfolio, and its cash stockpile has surged to $397 billion at the end of the first quarter.
Some have criticized the company for missing out on the massive bull run in stocks. But Berkshire is laser-focused on value, which is why the stock has delivered solid returns with lower volatility than the market in the long run.
Berkshire is trading at 14.4 times earnings, and investors have modest near-term growth expectations. That said, in a market correction, Berkshire Hathaway is one stock I’d want to own, because it will finally have an opportunity to put its huge cash stockpile to work.
JPMorgan Chase is an undisputed leader in the banking industry
JPMorgan Chase (NYSE: JPM) is the largest bank in the United States, with total assets of over $3.7 trillion. Under the leadership of CEO Jamie Dimon, the bank has grown to a massive scale, dwarfing its banking peers in the process. Its total assets are larger than those of both Wells Fargo and Citigroup combined, a testament to the bank’s ability to grow while keeping risk in check.
