There’s been a lot of talk this week about a potential stock market correction. This comes scorching on the heels of an update from the Bank of England (BoE) containing a warning to investors.

The bank noticed that investors are “placing less importance on risks such as geopolitical developments or persistently high inflation”, which increases the likelihood of a acute correction in asset prices.

Now, to be clear, the BoE isn’t indicating when the market will fall again. But the central bank is saying that investors may be starting to get complacent. That got me thinking: what stocks would I want to buy if we saw a drop?

Pharmaceutical Group on My Watchlist

As a reminder, a stock market correction is typically defined as a decline of at least 10% from a recent high. to break down A decrease of 20% or more is considered a decrease of 20% or more.

While this may be scary to some, I consider myself a long-term investor. This means I am willing to look past short-term uncertainty to buy high-quality stocks at bargain prices.

This FTSE100 is up 8.5% since the beginning of the year, but I still consider it a lucky fishing spot. At the same time, I have observed GSK (LSE:GSK) shares rose just 1.5% to 1,500.5 pence.

Despite lagging the broader index, I like the company’s fundamentals. With a market capitalization of over £60bn and a 3.9% dividend yield, GSK ticks many of my boxes.

One of the world’s leading pharmaceutical companies, GSK, has seen its share price under pressure recently. Recent official guidance in the US has narrowed its addressable market Arexvy vaccine. This, coupled with ongoing lawsuits related to its withdrawal Zantac Heartburn medicine didn’t facilitate the stock price.

However, if we were to see a correction in the UK stock market, I would be interested in investing in GSK. The company is an industry leader, with R&D activity totalling £6.2bn in 2023. I believe that economies of scale can benefit GSK and drive long-term value over my long-term investment horizon.

In addition, demand for drugs tends to remain stable regardless of the economic cycle. I like the defensive nature of the industry, and GSK can provide diversification benefits to my portfolio.

With a price-to-earnings (P/E) ratio of 14, it’s unthreatening to say that GSK isn’t the cheapest stock on the market. However, a broader market decline could affect its valuation, and I’ll be waiting on the sidelines to buy.

Stupid takeaway

I am a supporter of GSK’s business and the sector it operates in, but there are risks that could impact my investment thesis.

In recent weeks, we have seen that regulatory hurdles can affect potential sales of a recent drug. The potential threat of lawsuits and the failure rate of recent products in the R&D process can also affect valuation.

But I believe in supporting long-term leaders in their field. If we were to see a stock market correction, GSK is one of them. warehouse I’d like to buy.