3 companies to protect you against a market pullback

Fears over the Fed's stimulus program have dominated equity markets this week and a pullback could be just around the corner.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Stock markets around the globe have performed strongly over the past 18 months or so, aided strongly by the US Federal Reserve's bond buying program. However, fears that the Fed will reduce the stimulus program have dominated Wall Street this week, with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) feeling the flow-on effects.

The benchmark index fell roughly 1.5% between Monday and Tuesday before recovering slightly yesterday. Whilst some analysts have suggested that the tapering of the Fed's program has already been priced into the index, others have predicted that a significant pullback could occur.

By no means does this mean that investors should be selling all their shares and running for the hills – any pullback that may or may not occur would only be temporary.

After all, "the market always goes down faster than it goes up. But it always goes up more than it goes down", says David Gardner, the founder and CEO of The Motley Fool.

However, investors should be reassessing the strength of their portfolio to ensure that they are prepared for a pullback. Small-cap and growth stocks and much more vulnerable to market pullbacks, making it as important as ever to have a strong foundation for your portfolio. Here are three core companies you could consider buying at today's prices:

Since its low in early 2011, Telstra (ASX: TLS) has rallied strongly with shares climbing from around $2.57 to today's price of $5.05 – almost a 100% gain. However, given the strength of the telco's business and the competitive advantage it holds against others in the industry, Telstra is well-positioned to continue climbing strongly well into the future. If that wasn't enough for investors, then its 5.6% dividend yield makes it even more appealing.

Coca-Cola Amatil (ASX: CCL) is the manufacturer and distributor of some of the strongest brands in the world. Despite having delivered investors with consistently strong gains over the last five years, the company has struggled this year due to pressures from supermarket giants Woolworths (ASX: WOW) and Wesfarmers (ASX: WES) as well as a pricing war with rival Schweppes.

Whilst it's been a year to forget for shareholders, the future remains bright, particularly due to the company's expansion prospects in Indonesia. At $12.14, the shares are sitting 21% below their March high and could deliver excellent returns in the long-run.

Twenty-First Century Fox (ASX: FOX) is another opportunity for you to consider. The company split off from News Corp (ASX: NWS) earlier this year and holds many of the higher growth assets from the old combined business, including film and television studios as well as cable channels. Commsec has forecast strong price-to-earnings growth in the coming years, which would see the company's shares climb considerably higher than their current level of $36.16.

 

Motley Fool contributor Ryan Newman owns shares in Twenty-First Century Fox.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »