October began with a jolt for stock market investors. Rising bond yields and concerns about the UK economy sent the FTSE 100 sharply lower, raising fresh fears that a stock market crash could be just round the corner.

Yet almost halfway through the month, the mood has changed. The index has recovered ground, including a strong rise on Monday (12 October), and those early jitters appear to have faded.

But does that mean the danger has passed? With the Autumn Budget approaching and uncertainty still hanging over the global economy, I’m looking at what could unsettle markets again, and how investors can prepare without trying to predict the next crash.

Be prepared

For me, preparing for a potential stock market crash means keeping some dry powder ready to take advantage if my favourite shares go on sale. But it doesn’t mean selling everything. If a crash never comes, I could miss out on gains while my cash sits on the sidelines.

The second part is research. I’m looking for companies with strong cash flows and resilient balance sheets that could withstand tougher conditions.

As Warren Buffett famously put it:

Only when the tide goes out do you discover who’s been swimming naked.

I want to know which businesses are financially sound before the market puts them to the test.

A defensive share for uncertain times?

Unilever (LSE: ULVR) owns everyday brands such as Dove, Vaseline and Domestos, giving it exposure to products consumers regularly replenish. Its current dividend yield of 3.5% is broadly in line with the FTSE 100 average.

Its latest half-year results showed underlying sales growth of 5.8% in the second quarter, with volumes up 5.5%, its strongest quarterly volume performance since 2010. Its biggest brands, which account for 78% of turnover, delivered even stronger growth.

That suggests Unilever is growing by selling more products, rather than relying solely on price increases.

Financial strength to weather a storm

One metric I always keep a close eye on is cash flow. If times get tough, cash can become more important than turnover or reported profit.

The company’s free cash flow improved to €1.5bn in the first half of 2026, from €1.1bn a year earlier, helped by higher operating profit and improved working capital. Management expects cash conversion of around 100% for the full year.

A strong balance sheet is also important. Net debt rose to €26bn in the first half, reflecting dividend payments and a €1.5bn share buyback. Net debt stood at 2.3 times underlying EBITDA. That looks manageable for a business of Unilever’s size, and management expects the ratio to fall to around two times by year-end.

Of course, none of this would prevent Unilever’s share price falling during a market crash. But its strong brands, growing sales volumes and healthy cash generation could help it weather the storm if economic conditions deteriorate.

What’s the verdict?

Unilever isn’t an explosive growth story these days. Strategic missteps haven’t helped, and a P/E ratio of around 13 suggests the market isn’t expecting rapid expansion.

But that maturity appeals to me as I consider how to balance my own Stocks and Shares ISA ahead of a potential market sell-off. For income-seeking investors looking for a business with defensive qualities, Unilever could be one stock to consider.

Should you invest £5,000 in Unilever right now?

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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Unilever made the list?

Andrew Mackie owns shares in Unilever.