Skip to main content

The Globe and Mail

Crash test: 11 stocks that made it through

Getty Images/iStockphoto

What we're looking for

Resilient stocks in the event of another downturn.

It's a great time to be an investor, isn't it?

Story continues below advertisement

The markets are on fire, at least in the United States. Both the Dow Jones industrial average and the S&P 500 index reached record highs this week. Corporate profits are on the rise, and both oil and natural gas prices look set for gains. The bulls are clearly running the show.

However, there are some alarming aspects to this party. First of all, the current rally is mainly a creation of the U.S. Federal Reserve's policy of quantitative easing. It's also moving on thin volumes and low volatility – conditions historically linked to sudden market drops. And it's not at all reflective of the U.S. economy, which is still struggling to avoid another recession.

On top of this, fresh questions are being raised about the stability of the euro zone in the wake of Cyprus's banking crisis, and the possible collapse of China's housing bubbles (yes, there are more than one), which could cast a chill over the global recovery.

How we did it

We looked for North American stocks that might weather a sudden downturn better than most, using the following criteria:

-Market cap of at least $200-million;

-Positive trailing 12 months basic earnings per share;

Story continues below advertisement

-Five-year average return on equity greater than 10;

-Current price-to-tangible-book-value per share of less than one.

The tangible book value of a company is an indication of what would be left if a company were forced to sell all its assets at book value and pay off all its liabilities. The calculation excludes intangible assets, such as patents, trademarks and goodwill, since these might not be able to be sold. The lower the price-to-tangible-book-value ratio, the more confident shareholders can be that they will be able to recover a portion of their investment in the event of bankruptcy.

What we found

Insurance and resource stocks stand out in this list, followed by financial and consumer companies. Looking at their technical charts on, it's clear that some of these firms felt the full wrath of the 2008 crisis, notably AIG. However, companies such as Indigo Books & Music and Corning Inc. rode it out virtually unscathed.

Please remember that this screen provides investment ideas only. Before buying any of the stocks here, do your own research.

Story continues below advertisement

Report an error Licensing Options
About the Author
Streetwise editor

Jody White is the web editor for Streetwise. He previously worked as a senior editor at Canadian Business Online and has written for MoneySense Magazine, Maclean's, the National Post and other national publications. More


The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at