Value investors are not in the drama when it comes to investing. Slow and steady pedestrian stocks of profit-making companies are especially important now that markets are more turbulent and the world is more uncertain.
The highs and (very) lows of funds such as
Catherine Bois (Businesses, Portfolio)’s Ark Invest (ARKK, Financial) are not what value investors are looking for. Instead, we model our strategies on the philosophy of
warren buffet (Jobs, Portfolio). Value investors are more than happy to invest in companies that have a proven track record. With some of these boring stocks and a buy and hold strategy, we may only need to monitor and rebalance our portfolios twice a year or less.
This makes investing easier and less nerve-wracking. If you’re the kind of investor who wants to see boring stocks that have a high chance of producing steady growth over time, here are six of my favorite picks for turbulent times.
Home repair and improvement supplies aren’t sexy unless you’re a homeowner – or a Lowe’s (LOW, financial). Lowe’s is down from its pandemic lockdown highs, but Wall Street analysts still view it as a buy-and-hold stock. The company is expected to achieve an operating margin of 13% this year, and a buoyant real estate market is helping boost profits. So far this year, earnings per share are on target and its price-earnings ratio is low at 16.97.
One of the things that people will continue to spend money on during an economic downturn is health care. A boring stock in healthcare is UnitedHealth Group (UN, which receives a buy rating on Wall Street. UnitedHealth Group’s price-to-earnings ratio of 29.52 is a bit high, but it has a dividend yield 1.09%.With conservative management at UnitedHealth, I believe the health insurance giant is ready to weather any storms in the future.
Natural gas and energy company Duke Energy (duke, Financial) makes this list of boring value stocks, because energy is another difficult area to eliminate from a budget. Duke has a dividend yield of 3.40%, which makes it attractive if passive income is part of your portfolio plan. Duke hasn’t seen any wild swings in its stock price and it’s trading below its 52-week high. That and rising fuel prices could make Duke a bargain right now.
What could be more boring than a company that provides analyzes and credit scores? Moody’s (MCO, Financial) provides both, but it’s classified as a buy-and-hold stock on Wall Street, and it’s trading below its 52-week high. Moody’s optimists say the company will benefit from increased financial regulation and Moody’s Analytics will be a growth area for the company. I think it’s probably a stock you can set and forget.
The Mosaic Company
The Mosaic Company (MOS, Financial) is a producer of potash and phosphates for agricultural use. Another stock listed for buy and hold by Wall Street, Mosaic’s stock could rise with fertilizer prices as farming becomes more difficult due to topsoil depletion and climate change. Its price-to-earnings ratio of 17.66 is low and Mosaic is trading below its 52-week high.
In turbulent times, food stocks can be long-term beneficiaries. After all, consumers will always want to buy their favorite foods. This means that the Conagra brands (GAC, Financial) may be a value opportunity right now, as it is trading several dollars below its highs of last year and has a dividend yield of 3.56%.
Conagra still faces inflationary pressures. Its cost of revenue is up 9.85% and its profit margin is just over 7%. It has about $9 billion in debt as of 2021. However, its brands, such as Duncan Hines, Hunt’s, Bertolli and Healthy Choice, are favorites with shoppers. Chances are Conagra won’t get huge increases in its share price, but it’s a profitable company that can probably stand the test of inflation.