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My 2 Favorite Stocks To Buy Right Now

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Wall Street is off to a volatile start in 2025. The S&P 500 (SNPINDEX: ^GSPC) index has seen a total return of 3.2% year to date on Jan. 28, but the ride has not been smooth. Growth investors threw some more fuel on the unpredictable fires this week as the DeepSeek artificial intelligence (AI) tool cast dark shadows over the ongoing AI spree. And the Federal Reserve might slow down its interest rate cuts in 2025, which is more bad news for growth-oriented investors.

All things considered, it might be time to prepare for a calmer, cooler stock market. Bull markets don't last forever, and stocks are starting to look overpriced in general. Staying invested for the long haul is still a good idea, but you should consider adding a couple of bear market-resistant stocks to your portfolio right now.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

Here are two of my best ideas.

1. Walmart

Discount stores tend to thrive in a challenging economy. Walmart (NYSE: WMT), the king of low-priced shopping, is no exception.

Remember the subprime mortgage crash of 2008? Starting from the end of 2007, the S&P 500 fell more than 50% in 14 months. Walmart stock took a milder hit, with a total return of 3% over the same time span.

Walmart earned its stability the hard way. Its revenue growth slowed down in those dark days, but the cash profits kept growing:

WMT Revenue (TTM) data by YCharts

The recent inflation crisis was tougher on Walmart's bottom line, since higher merchandise and grocery prices put direct pressure on household shopping budgets. Still, the retail empire from Arkansas quickly adjusted to the changing market conditions, and its free cash flows are on the rise again.

Let's imagine the stock market running into trouble in 2025 or 2026. The AI boom could slow down or change direction, a new wave of tariff-based trade wars may kick-start another inflation spurt, and what if the bird flu becomes the next pandemic?

Walmart would surely feel the heat from some of these credible threats. Another round of grocery price increases could be difficult. However, the company is not resting on its laurels. Walmart has become the second-largest name in American e-commerce these days, hot on the heels of segment giant Amazon.

As a result, I expect Walmart's business to hold up just fine in the next downturn, even if many shoppers are staying home. Walmart is doing great in the current economy, too.

The only downside is that investors have noticed the company's strong momentum, driving the stock up to a pricey valuation at 40 times trailing earnings. But if you want to prepare for a market shift, there just isn't a more reliable name than Walmart.

2. Ross Stores

Fellow discount-shopping veteran Ross Stores (NASDAQ: ROST) offers a different angle on the same market situation. Ross actually outperformed Walmart in the 14-month span mentioned, delivering a 16% total return in the subprime meltdown.

And if you see that financial crisis as the start of a long-term investment, Ross shares would have done great things for your portfolio in the last 17 years:

ROST Total Return Level Chart

ROST Total Return Level data by YCharts

The stock isn't even expensive after that skyrocketing growth spurt. Ross shares are changing hands at 24 times earnings. Despite a focus on low-cost merchandise, Ross sports some of the strongest profit margins in this industry.

If Walmart's valuation looks too rich, but you're seeking a strong performer in discount retail, consider Ross Stores. You can dress for less and still prepare for the next bear market in style.

Should you invest $1,000 in Walmart right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Amazon and Walmart. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.


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