It's a fact of investing life that there will always be another stock market crash. Market crashes come around every few years on the ASX. They are not pleasant, but they are inevitable.
That's why it's always a good idea to plan ahead for the next one, whenever that may be. Figuring out how to deal with one is a lot less dangerous before it actually happens, rather than in the middle of a widespread market panic.
Market crashes tend to result in most ASX shares taking a pretty nasty haircut. But some ASX shares actually thrive during times of mass panic. These stocks are usually grouped together under the 'defensive shares' banner.
Not all defensive shares prove to be good investments. But many do. And the best time to buy them can often be before a market crash occurs, before investors start flocking to the safe harbour that these companies can offer.
So today, we'll discuss three defensive ASX shares that I think are looking relatively cheap today, but might end up seeing a light to safety if a market crash does come around.
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3 defensive ASX shares I'd buy before the next market crash
Coles Group Ltd (ASX: COL)
Everyone knows Coles. It's the company behind the second-largest grocery and supermarket chain in the country, as well as behind some other consumer staples brands such as First Choice Liquor.
Most consumer staples shares tend to be viewed as safe havens by investors. In Coles' case, this comes down to how vital the food and household essentials that the company provides are for its customers, regardless of the economic weather.
Last year, it looked as though Coles shares were closing in on the $20 share price mark. But today, the company is languishing at multi-year lows, and going for around $15.50.
The company's low valuation and relatively high dividend yield might make it a tempting place to park cash during a stock market crash. As such. I think Coles is offering compelling value today.
Lottery Corp Ltd (ASX: TLC)
Lottery Corp is another defensive share worth a look. Although this company is a relative newcomer to the ASX, it has been around in some form or another for decades. Lottery Corp holds exclusive licenses to run lotteries and Keno in almost all states and territories. Many of these licenses expire in many decades' time.
During recessions and other economic maladies that typically spark stock market crashes, consumers tend to keep buying lottery tickets in the hopes of winning big.
This makes Lottery Corp a highly defensive share as well. Yet we've also seen a sharp share price pullback here in recent months. Back in August, the Lottery Corp share price was asking over $5.30 each. Today, you can get those same shares for around $4.57.
Again, I'd wager that this company will be one of the first places jittery investors move to if there is a stock market crash around the corner. So today's share pricing might prove to look cheap in hindsight.
iShares Global Consumer Staples ETF (ASX: IXI)
This exchange-traded fund (ETF) is a final investment to consider before the next market crash. It holds a portfolio of global consumer sales giants. These include world-famous companies like Coca-Cola, Clorox, Colgate-Palmolive, Unilever, Philip Morris International, Walmart and Procter & Gamble. This kind of defensive calibre simply isn't available on the ASX.
During the last stock market crash in 2020, this ETF held up remarkably well, only dropping by a little over 5% between 21 February and 20 March 2020. Over the same period, the S&P/ASX 200 Index (ASX: XJO) lost just over 32%.
Once more, we've seen this defensive share come off the boil over the past few months, with IXI units shedding more than 7.7% since April. Thus, it could be a good time to check this ETF out.
