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

The article argues for buy-and-hold positions in Costco, Royal Caribbean, and Sirius XM despite summer volatility. Costco shares are ~3% lower over the past year and trades around 42x next year’s earnings, supported by 32 of 33 years of net sales growth. Royal Caribbean reported Q2 revenue up 6% but earnings pressure from 11% higher operating costs (mostly fuel, food, and labor); it trimmed full-year revenue growth to 9% from 10% while lifting adjusted earnings outlook, and the stock trades at a mid-teens forward multiple. Sirius XM is up ~40% over the past year with 17% earnings growth and ~20% per-share growth on aggressive buybacks, priced at ~10x forward earnings with a 3.6% yield.

Analysis

The cleaner read is that these are three different factor exposures disguised as ‘steady’ ideas. COST is not a cheap defensive; it is a duration-sensitive quality compounder whose multiple can compress hard if real yields stay elevated or if the market rotates from defensives into cyclicals. The business can still grind higher, but at ~40x+ forward earnings the stock behaves more like a long-duration bond than a grocery retailer, so the upside over the next 1-3 months is likely capped unless the market is willing to pay up for safety again.

RCL is the highest beta operating lever here: small changes in fuel, wage inflation, or occupancy flow through disproportionately to EPS. The near-term catalyst path is less about demand and more about whether margin expansion can keep outrunning cost inflation; if crude and wage pressure ease, the stock can rerate quickly over 1-3 months. Conversely, any guidance wobble on onboard spend, yields, or booking quality would likely hit the multiple first and the earnings estimates later. The market is still underestimating how sensitive leisure names are to a recession scare even when bookings look fine.

SIRI is the most interesting contrarian: the bull case depends on buybacks and cash generation overpowering structural subscriber leakage, but the market tends to pay up for that only when refinancing risk is low and auto volumes are stable. That makes it a tactical value trade, not a secular growth story. If credit spreads widen or used-car/auto production weakens, the downside can come faster than the dividend compensates. The consensus is likely overstating the ‘downside protection’ angle across all three names: protection here is only durable if macro stays benign and multiples do not compress.

Key Decisions for Investors

• Stay neutral-to-underweight COST on valuation: do not chase here unless it pulls back into a lower-multiple window; risk/reward is only attractive on a 10-15% drawdown or if forward EPS revisions accelerate.
• Initiate a tactical long RCL only on a crude retreat or post-earnings dip; target a 2-3 month reversion trade with upside to multiple expansion if margin guidance holds, but cut quickly if operating cost inflation re-accelerates.
• Consider a long SIRI / short TGT pair for a 1-3 month value-and-capital-return trade: SIRI has explicit buyback support, while TGT remains more exposed to margin pressure and competitive pricing; stop if SIRI loses dividend/buyback credibility.
• Avoid treating SIRI as a core compounder; if auto sales or credit conditions soften, the thesis weakens materially within months, so use it only as a high-yield, short-duration income trade.
• Watch COST versus TGT as a relative-quality signal: if consumer spending weakens further, COST should keep outperforming; if the pair breaks against COST, it likely signals broader multiple compression for defensive retail.