3 Stocks to Buy and Hold Even If There's a Stock Market Sell-Off in August

The article highlights three buy-and-hold ideas on valuation pullbacks: Costco is ~3% lower over the past year and trades at ~42x next year’s earnings while sales/earnings trend higher. Royal Caribbean’s Q2 showed revenue up 6% but adjusted earnings down as operating costs rose 11% (largely fuel, food, and labor), leading to a forecast trim to ~9% full-year revenue growth; however, bookings for 2027 are ahead and the stock remains valued at a mid-teens forward P/E. Sirius XM is up ~40% over the past year, with earnings up 17% and per-share earnings up 20% on aggressive buybacks, trading at ~10x forward earnings with a 3.6% yield.

Analysis

The investable distinction here is not “quality vs cheap,” it’s valuation durability. COST is the cleanest defensive compounder, but at a high multiple its equity behaves like a long-duration asset: it can underperform even on good numbers if rates stay sticky or if consumer staples trade down to lower-quality defensives. That makes it more interesting as a relative long vs TGT than as a naked long from here, because COST can keep comping while TGT’s margin structure is more exposed to price competition and traffic volatility.

RCL is the most cyclical name in the set and the one where second-order inputs matter most. Fuel, food, and labor inflation can turn a good booking environment into a flat EPS story very quickly, so the key market variable is not demand alone but whether forward pricing keeps outrunning input-cost beta over the next 1-3 quarters. If crude stays contained, RCL deserves a premium to legacy cruise peers; if energy re-accelerates, that premium should compress fast.

SIRI is basically a capital-return vehicle with a shrinking but still meaningful cash stream. The market may be underpricing the possibility that buybacks offset slow erosion for a while, but the contrarian risk is that embedded-in-car media is a structurally weaker wedge than the headline yield suggests, especially if OEMs and phone ecosystems continue to disintermediate listening hours. In that sense, the downside is less about one bad quarter and more about an eventual reset in terminal growth assumptions; this is a “watch the cash flow” story, not a momentum story.

Key Decisions for Investors

• Prefer COST over TGT on weakness: initiate a relative long COST / short TGT pair over the next 1-3 months; thesis is that COST’s membership model sustains a premium multiple while TGT is more exposed to promo pressure and margin volatility. Falsifier: COST comps or renewal economics weaken while TGT stabilizes gross margin.
• Do not chase COST at current levels; wait for a 5-8% pullback or a rates-driven de-rating before adding. Risk/reward is better on entry after a multiple reset than after headline optimism. Falsifier: forward EPS guide materially accelerates and the multiple stays intact.
• Trade RCL tactically only as a relative-value long vs CCL or NCLH over 3-6 months if fuel stays benign. Best case is continued premium pricing and operating leverage; worst case is a quick margin reset if Brent re-accelerates. Falsifier: crude breaks materially higher or booking curves soften.
• Treat SIRI as an income/FCF hold, not a growth long; if initiating, use covered calls rather than outright stock to monetize the 3.6% yield while limiting multiple risk. Falsifier: net subscriber trends or buyback pace deteriorate for two consecutive quarters.
• Set an alert on energy prices and consumer credit: a sustained move higher in fuel or weaker discretionary spend would hurt RCL first, then pressure the defensives-vs-cyclicals trade broadly.