Market Crash: 2 Stocks I'd Buy Without Hesitation

The S&P 500 has rallied nearly 80% over the past five years. It's hovering near its record highs, and it looks historically expensive at 32 times earnings -- even as geopolitical conflicts, inflation, and murky monetary policies generate unpredictable headwinds for many industries.

Therefore, many investors believe it's not a matter of if -- but when -- the market crashes. If that happens, I wouldn't panic and start liquidating my stocks. Instead, I'd look to buy the dip in well-run companies that had gotten a bit overheated in the previous bull cycle. Two such stocks I'd buy without any hesitation are Costco (NASDAQ: COST) and Amazon (NASDAQ: AMZN).

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Why would I buy Costco?

Costco, the world's largest warehouse club retailer, can afford to sell its products at low margins because it generates most of its profits from its membership fees. Its scale enables it to negotiate lower prices with its suppliers, and it locks in its members with its gas stations, food courts, optical centers, discounted travel perks, and other ancillary services. It's well-insulated from economic downturns, which typically drive more budget-conscious consumers to its stores.

Costco will succeed as long as it grows net sales, opens more warehouses, adds new cardholders, and maintains high renewal rates. From fiscal 2020 to fiscal 2025 (which ended last August), its revenue and EPS increased at CAGRs of 10.5% and 15.1%, respectively. Its year-end warehouse count grew from 795 to 914, its total cardholders increased from 105.5 million to 140.6 million, and its global renewal rate expanded from 88% to 90.5%.

In the first half of fiscal 2026, Costco's adjusted net sales (excluding fuel and forex) rose 6.5%, it increased its warehouse count to 924 locations, and its number of cardholders grew to 147.2 million. But its global renewal rate dipped to 89.7% in both the first and second quarters, mainly due to its loss of "digitally signed" members who had enrolled online rather than at a warehouse.

To stabilize its renewal rates, Costco is ramping up targeted digital communications, promoting its ancillary services, adding more perks, and trying to lock more members into its auto-renewal services. However, it admits those efforts could take a few quarters to bear fruit.

Nevertheless, analysts still expect Costco's revenue and EPS to grow at CAGRs of 8% and 11%, respectively, from fiscal 2025 to fiscal 2028. I believe it can easily hit those near-term targets, but Costco's stock isn't cheap at 50 times this year's earnings. If a market crash compresses those valuations, I'd eagerly scoop up some shares of this well-run company.

Why would I buy Amazon?

Amazon, the world's largest e-commerce and cloud infrastructure company, also has a wide moat and a sticky ecosystem. Its Prime ecosystem has locked in over 240 million subscribers worldwide with its discounts and digital perks, and its Amazon Web Services (AWS) platform controls nearly a third of the cloud infrastructure market, according to Canalys.

Amazon generates most of its revenue from its e-commerce business. Still, most of its profits come from its higher-margin cloud infrastructure business and growing advertising business -- which sells its promoted listings, marketplace ads, and streaming media ads. Therefore, Amazon can use its higher-margin cloud and advertising revenues to subsidize the expansion of its e-commerce business through lower-margin, loss-leading strategies.

That unique combination gives Amazon an edge against other retailers that lack comparable profit engines. That's why its revenue and EPS grew at CAGRs of 11% and 22%, respectively, from 2021 to 2025, even as inflation and other macro headwinds rattled the global economy.

From 2025 to 2028, analysts expect Amazon's revenue and EPS to increase at CAGRs of 14% and 21%, respectively, as its e-commerce business faces milder headwinds, the AI boom generates long-term tailwinds for AWS, and it continues to expand its digital advertising business.

That's an impressive growth trajectory, but its stock isn't a bargain at 31 times this year's earnings. So if a market crash reduces that valuation, I'd consider buying even more shares of Amazon -- even though it's already the single largest position in my stock portfolio.

Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Costco Wholesale. The Motley Fool has a disclosure policy.