For the better part of the last 2.5 years, the bulls have been calling the shots on Wall Street. The ageless Dow Jones Industrial Average, benchmark S&P 500, and growth-dominated Nasdaq Composite(NASDAQINDEX: ^IXIC) have all soared to numerous record-closing highs.
But following this monster rally in equities, Wall Street's highest-flying index, the Nasdaq Composite, is beginning to fade. Although the Nasdaq technically ended March 4 outside of correction territory -- down 9.4% from its all-time closing high on Dec. 16, 2024 -- it declined by 10.7% on a peak-to-trough intraday basis between Feb. 18 (20,110 high) and March 4 (17,957 low). For at least a brief period, the Nasdaq moved into correction territory.
Image source: Getty Images.
When the stock market's major indexes move lower by 10% or more from a recent high, these declines are rarely gradual. Emotions tend to run high during downturns, as evidenced by the roughly 700-point intraday swing for the Nasdaq Composite on March 4.
At the moment, nothing is ruffling investors' feathers more than the uncertainty tied to President Donald Trump's tariffs. Based on data from economists at the Federal Reserve Bank of New York, stocks performed poorly when Trump announced tariffs on goods from China in 2018 and 2019, and we appear to be witnessing an encore of this performance, but on a broader scale, in 2025.
Although it's unclear if the Nasdaq stock drop will steepen in the weeks to come, there are four exceptionally safe, historically inexpensive, time-tested stocks that can be confidently bought by opportunistic long-term investors right now.
Alphabet
While some members of the "Magnificent Seven" continue to trade at unwarranted premiums, Google parent Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG) stands out as arguably the best deal of the bunch.
The biggest knock against Alphabet is that its business is weighted toward advertising. Three-quarters of its $96.5 billion in sales last year trace back to various advertising platforms, including Google and YouTube. If the U.S. economy were to dip into a recession -- the Federal Reserve Bank of Atlanta's GDPNow forecast for the first quarter calls for a 2.8% contraction -- Alphabet's operating performance could struggle for a couple of quarters.
On the other hand, it's the undisputed leading search engine, with Google accounting for an 89% to 93% monthly share of worldwide search over the trailing decade. This means it's commanding strong ad-pricing power with businesses wanting to get their message(s) in front of consumers.
Google Cloud is also growing into a larger percentage of Alphabet's net sales. This considerably higher-margin segment benefits immensely from long-winded periods of economic expansion and is sporting almost $48 billion in annual run-rate revenue.
Shares of Alphabet can be scooped up for less than 17 times forward earnings estimates, which is an inexpensive price to pay for a cash-rich market leader that's only growing stronger.
Image source: Getty Images.
York Water
Utility stocks often thrive when stock market volatility picks up, which is why what I call "Wall Street's greatest dividend stock," York Water(NASDAQ: YORW), makes for a safe buy right now.
Don't feel ashamed if you've never heard about York Water before, because there's a good chance more than 99% of your fellow investors haven't, either. It's a utility providing water and wastewater services in just 56 municipalities spanning four counties in South-Central Pennsylvania. It's also not actively traded, with an average daily volume of around 68,100 shares.
But one of the best aspects of utility stocks is the predictability of their operating cash flow. Demand for water and wastewater services doesn't change a lot from one year to the next, which is what makes it easy for York's management to accurately forecast its cash flow and expenditures a year or more in advance. Having a good bead on its costs allows the company to make bolt-on acquisitions that expand its future cash flow and profit potential.
Something else that makes York a great investment is its continuous dividend streak. York Water has paid a dividend every year since its founding in 1816, and has increased its quarterly payout in each of the last 28 years.
Based on Wall Street's consensus earnings forecast for 2025, York Water is valued at a 25% discount to its average forward price-to-earnings (P/E) multiple over the last half-decade.
Pfizer
Investing in defensive sectors and industries is another smart way to combat a stock market correction. With the Nasdaq Composite pulling back by close to 11% on an intraday basis as I laid out above, investors would be wise to consider putting their money to work in pharmaceutical behemoth Pfizer(NYSE: PFE).
Just because the stock market, or one of its widely followed indexes, corrects lower, it doesn't mean people suddenly stop getting sick or requiring medical care. Pfizer's novel-drug portfolio contains dozens of therapies across a large swath of indications, including primary care, specialty care, and oncology. Pfizer can count on demand for novel drugs to remain consistent.
It's also worth noting that Pfizer is a considerably stronger company today than it was four years ago. Even though sales of its COVID-19 therapies have plunged from their peak just two years ago, the $63.6 billion Pfizer reported in 2024 full-year revenue (across its entire drug portfolio) is 52% higher than its full-year sales in 2020. Being a victim of its own success has created an opportunity for investors to pounce on this stock an attractive valuation.
To build on this point, Pfizer acquired cancer-drug developer Seagen for $43 billion in December 2023. The cost savings associated with this deal, coupled with the expanded long-term opportunities for Pfizer's oncology pipeline, should notably improve its profit potential moving forward.
With a forward P/E ratio of a little north of 8 and a dividend yield that's approaching 7%, Pfizer stock makes for a slam-dunk buy during a correction.
Sirius XM Holdings
A fourth safe stock that can confidently be bought during the Nasdaq stock decline is Warren Buffett favorite, Sirius XM Holdings(NASDAQ: SIRI).
The clearest competitive edge Sirius XM offers is that it's a legal monopoly. There aren't any other companies that are licensed for satellite radio, which affords Sirius XM a degree of subscription pricing power that most other businesses lack.
But what might be even more important than its legal monopoly status is its revenue diversity. For terrestrial and online radio companies, advertising makes up virtually all of their sales. While this approach works remarkably well when the U.S. economy is firing on all cylinders, businesses aren't shy about cutting back their ad spending at the first signs of trouble. Sirius XM generated just 20% of its net sales from ads in 2024, with a whopping 76% coming from subscriptions.
When the going gets tough, Sirius XM's self-pay subscribers are far less likely to cancel their service than businesses are to pare back their ad spending. In other words, when emotions run high, Sirius XM's operating cash flow tends to shine brightest among radio operators.
The final piece of the puzzle is Sirius XM's historically cheap valuation. Sirius XM's forward P/E of 7.6 is nearly half of what it's averaged over the last five years. What's more, patient investors are being rewarded with a 4.6% dividend yield.
Don’t miss this second chance at a potentially lucrative opportunity
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Sean Williams has positions in Alphabet and Sirius XM. The Motley Fool has positions in and recommends Alphabet and Pfizer. The Motley Fool has a disclosure policy.
