Bear markets can occur because of a number of reasons, including slower economic activity, a tightening of monetary and fiscal policy, and a geopolitical crisis like Russia invading Ukraine. Regardless of the why, the common theme coming from bear markets is that traders look for security in the less risky assets and stocks.
Resiliency is more often measured by the degree to which a company’s profits and sales fall due to the factor or combination of many factors that can cause the bear market. To take it a little further, resiliency can be demonstrated by a company emerging more powerful from a bear market than it was going in.
Here are a few stocks that fit that description in relation to how they responded to the COVID pandemic and the aftermath of it.
Starbucks took a big hit during the COVID-19 pandemic. The business generates a large part of its revenue from people walking into its coffee shops. The forced closure of all their locations to help slow the spread of the Covid virus hurt its sales. That said, the company quickly adapted, permanently closing its downtown locations and providing parking lot pickup.
Its sales had fallen in 2020, but not as much as you might expect — 11.3% from just the year before. And the company emerged more robust than it has ever been in 2021. Operating and sales income of $4.6 billion and $29 billion were the highest they’ve been in the last ten years.
Like Starbucks, McDonald’s suffered a decreased amount of sales when it closed thousands of its restaurants to in-person dining. McDonald’s management team also adapted well to the Covid pandemic, emphasizing its digital sales and securing partnerships with many third-party delivery services.
As a result of this, McDonald’s revenue rose by 21% in 2021, which had led to earnings of $5.25 per share, the highest in the past decade. Fortunately for the shareholders, the moves that McDonald’s made will likely pay off in the long term.
Alphabet’s slowdown at the onset of the pandemic was short-lived and demonstrated Alphabet’s importance. The parent of Google produces most of its revenue from its advertisers. Understandably, businesses cut ad spending at the beginning of the pandemic when the short term was uncertain. However, once it was certain that consumer spending would stay robust, companies ramped up their ad spending, and Alphabet benefited from this rebound.
Alphabet grew its sales by 41% during 2021, almost double its compound yearly growth rate over the last ten years. Profits followed as operating income grew from $41 billion in 2020 to $78.7 billion in 2021.