If November was the month of hope for the markets, in December investors may be on pause, wondering what’s next for the economy? News of vaccines sent the stock market into a frenzy, with people selling staples and looking to make some quick cash through growth stocks.
But don’t be fooled. Another market crash is quite likely. The vaccine exists, but it will be months until it’s available to the general public.
Meanwhile, COVID-19 cases continue to skyrocket in our country and others, causing many cities to enter the red stage, or control stage, to help prevent cases from rising higher. This stage imposes strict restrictions – the last steps before a full lockdown, which could be detrimental to the economy.
How to prepare
Value stocks trade far below fundamentals, such as a low price to book ratio, low price to earnings ratio, or a high dividend yield. These companies likely have lower share prices because of temporary issues. Such examples include some bad publicity, or a bad earnings report. But these companies are also stable companies with years of solid performance, providing stable dividends to their shareholders.
So what you want to find, in layman’s terms, is a bargain. Right now is a great time to buy, as these companies are the ones investors will flock to during the next market crash — and you’ll already be prepared and waiting to see your returns flood in. So let’s take a look at two options.
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Top value stocks
The oil and gas sector has been beaten down during the pandemic, yet the vaccine boosted a lot of these companies. However, Enbridge Inc. (TSX:ENB)(NYSE:ENB) still remains a value stock in today’s market. The company trades at 1.5x price to book ratio (P/B), with a high dividend yield of 8.14% as of writing. That yield is completely safe, backed up by decades of long-term contracts.
But Enbridge is also growing. It has pipelines set to put an end to the oil and gas glut. While green energy is likely to one day take over, that won’t be for decades. Meanwhile, shares in Enbridge will soar higher in the next few years, and you’ll receive a massive dividend while you wait.
Another solid company to hold now and long-term is Manulife Financial Corp. (TSX:MFC)(NYSE:MFC). Manulife provides financial advice and insurance throughout the world, and will continue to remain strong, vaccine or not. The company even has room to grow, as it continues to expand into Asian and emerging markets.
Meanwhile, shares trade at a P/B ratio of 0.9x as of writing, with a 4.98% dividend yield. You could buy this company now and be set up with a lifetime stock that will continue making dividend payouts well into your retirement. And you can get all this for a huge discount, as shares still trade at a 10% discount to pre-crash levels.
Now is the time to prepare for another crash, and the best way to do that is by finding value stocks like these. Enbridge and Manulife provide strong options to keep your funds safe and stable now, and years – even decades – from now. If and when another market crash happens, you’ll be happy you have these two in your corner.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Amy Legate-Wolfe owns shares of ENBRIDGE INC. The Motley Fool owns shares of and recommends Enbridge.