The last three weeks have been volatile for sharemarket investors, and acted as a strong reminder of the importance of buying high-quality companies capable of withstanding even the strongest economic headwinds.
Although all shares are at risk of falling during such a broad sell-off, some companies remain somewhat more protected thanks to their strong balance sheets and defensive revenue streams.
Here are four that you should consider adding to your portfolio to help navigate your way through the current market crash.
Burson Group Ltd (ASX: BAP) is one of those rare businesses that actually tends to get stronger during an economic downturn. As individuals become increasingly uncertain, they tend to hold onto their older cars for longer, resulting in an increase in demand for the automotive parts Burson provides. Better yet, it can also tend to increase prices with little impact on overall demand, providing a boost for margins.
Veda Group Ltd (ASX: VED), a data analytics business, is another company with defensive revenue streams. During tougher economic conditions, businesses become increasingly concerned about the quality of their balance sheets, and thus, become more selective with who they choose to extend credit to. As a result, demand for Veda's services remains high, with double-digit growth forecast for the current financial year.
Cash Converters International Ltd (ASX: CCV) is a payday lender whose services could become higher in demand should times get tough. During economic downturns, individuals may need to pawn some of their smaller assets for cash while others will need short-term loans to meet certain payments on time.
The company has faced its fair share of headwinds and there are certainly risks with an investment, but at 42.5 cents per share, it could be worth holding onto.
Somnomed Limited (ASX: SOM) develops products for the treatment of sleep apnea a condition that can cause other serious health issues if left untreated. Although SomnoMed's products mightn't be in the same league as those provided by ResMed Inc. (CHESS) or Fisher & Paykel Healthcare Corp Ltd, they are less invasive and cheaper.
This could prove to be a more attractive option for sufferers of sleep apnea in the future. As an added bonus, SomnoMed is still a small company particularly when compared to its larger rivals ResMed and Fisher & Paykel. With plenty of growth potential, SomnoMed could be a great investment today.
