Slow and steady might win the race in 2023
- Colgate-Palmolive (CL): Colgate-Palmolive offers a solid yield.
- Duke Energy (DUK): Duke Energy benefits from a natural monopoly.
- McDonald’s (MCD): McDonald’s is a consensus strong buy.
- Continue reading for a complete list of boring stocks to buy!
With rising fears of a market meltdown stemming from the fallout in the banking sector, boring stocks to buy make plenty of sense. By boring, we’re not necessarily talking about the adjective in the literal sense. Rather, the focus centers on the resilience and most importantly predictability of the underlying businesses.
Think about the everyday products and services that you require. Is the concept of paying your utility bills a sexy one? Is anyone doing TikToks about waiting in line at the grocery store? Probably not. However, these activities undergird several enterprises that we take for granted. Better yet, these enterprises command relevance irrespective of what’s going on with the economy.
To be perfectly blunt, no one knows what’s going to happen in the next few days, weeks, and months. Maybe the market melts down further or maybe we jump higher – who knows? What we do know is that we need to eat, sleep and take care of ourselves. With that, below are the boring stocks to buy to shield against banking chaos.
A multinational consumer products firm, Colgate-Palmolive (NYSE:CL) fundamentally benefits from everyday pertinence. While economic pressures may force people to sacrifice services such as medical or dental, products such as toothbrushes and toothpaste don’t cost much. However, through their frequent use, they can save consumers plenty of trouble. That’s one way of looking at CL.
Another factor to consider is that boring stocks to buy typically benefit from predictable businesses. And this predictability fosters resilience in its financials. For instance, Colgate-Palmolive’s three-year book growth rate stands at 52.2%, above almost 96% of the competition. Further, its net margin is just under 10%, boxing out 79.57% of its peers.
As well, the consumer goods firm provides a forward yield of 2.66%. Notably, the company features 61 years of consecutive annual dividend increases, making it a dividend king. Finally, Wall Street analysts peg CL as a consensus moderate buy. Additionally, their average price target comes in at $79.70, implying over 10% upside potential.
Duke Energy (DUK)
When it comes to boring stocks to buy, few sectors facilitate yawns quite like the utilities. Still, with fears rising regarding a banking contagion, investors should put Duke Energy (NYSE:DUK) on their radar. Topically, Duke like other utility firms benefits from natural monopolies. Because of the extremely high barriers to entry, the competition really shouldn’t be a problem.
More importantly, households need Duke’s services. Irrespective of whatever’s happening in the economy, people require access to electricity and other critical resources. Therefore, utilities represent the last budget item to be axed. Cynically, this provides ongoing relevance for DUK and its ilk. Not dissimilar to other utility players, Duke’s financial profile pings as so-so. However, it does enjoy consistent profitability. In turn, the company provides a forward yield of 4.17%, above the utility sector’s average yield of 3.75%. Also, Duke benefits from 18 years of consecutive dividend increases, a status it won’t give up on without a fight.
Lastly, covering analysts peg DUK as a consensus moderate buy. Their average price target stands at $108.44, implying almost 13% upside potential.
An iconic fast-food chain, McDonald’s (NYSE:MCD) presents a mixture of varying fundamentals. On one hand, the company ties into the consumer discretionary space. Frankly, you don’t have to get food at McDonald’s – you choose to. On the other hand, the Golden Arches represents a major player among boring stocks to buy. MCD is a consistent player in the charts, making it an ideal name for troubled times.
A key tailwind for McDonald’s is the trade-down effect. Offering coffee and a full breakfast menu, the fast-food specialist provides compelling competition against pricier coffee shops. Also, with many people returning to the office, McDonald’s offers a respite from the drudgery. Financially, the company brings solid metrics to the table. Its three-year revenue growth rate is 3.8%, above 74.39% of the field. Also, its net margin comes in at 26.65%, boxing out 96.55% of peers. Currently, McDonald’s carries a forward yield of 2.28%. In closing, covering analysts peg MCD as a consensus strong buy. Their average price target stands at $296, implying nearly 11% upside potential.
Grocery Outlet (GO)
A discount closeout retailer, Grocery Outlet (NASDAQ:GO) specializes in deeply discounted, overstocked, and closeout products from name-brand and private-label suppliers. While arguably most grocery stores may be ideal candidates for boring stocks to buy, investors will particularly appreciate Grocery Outlet. Its focus on discounted products should be extremely appealing as economic conditions potentially worsen.
To be fair, the company’s main strength lies in its fundamental narrative. Basically, Grocery Outlet sits at the bottom of the trade-down effect. In other words, you really can’t go much cheaper than discounted grocery products. Still, it does deliver some positive attributes. For example, its three-year book growth rate pings at 10.9%, outpacing 68.8% of its peers. Also, its operating margin comes in at 30.52%. This stat ranks above 72.67% of the underlying industry. Turning to Wall Street, analysts peg GO as a consensus moderate buy. Moreover, their average price target stands at $30.75, implying over 14% upside potential.
An American retailing giant, Lowe’s (NYSE:LOW) specializes in home improvement. Fundamentally, what makes LOW appealing as a candidate for boring stocks to buy centers on flexible relevance. Should the economy weaken, consumers may end up repairing issues on their own, thus boosting Lowe’s sales. On the other hand, if the economy improves, Lowe’s may see increased demand from contractors.
In line with expectations for boring stocks to buy, the home-improvement retailer benefits from attractive financials. For instance, the company’s three-year revenue growth rate stands at 18.4%, above 81.35% of the field. Its free cash flow (FCF) growth rate during the same period pings at 43.7%, above nearly 82% of sector peers. Also, its net margin is 6.63%, which ranks above 74.25% of the industry. It also helps undergird Lowe’s forward yield of 2.13%. Notably, the company has 49 years of consecutive dividend increases, just on the cusp of dividend king status. Looking to the Street, covering analysts peg LOW as a consensus moderate buy. Further, their average price target stands at $229.73, implying over 16% upside potential.
A British multinational consumer goods company, Unilever (NYSE:UL) offers various products. These include food, condiments, bottled water, baby food, soft drink, ice cream, instant coffee, cleaning agents, energy drink, toothpaste, pet food, pharmaceutical, and consumer healthcare products, among many others. Generally speaking, UL responded well to various headwinds, gaining almost 9% in the trailing year.
As with other essential goods businesses, Unilever doesn’t offer exceedingly remarkable financials. However, the company simply gets the job done, making it one of the boring stocks to buy. Notably, Unilever enjoys stability in the balance sheet, with an Altman Z-Score of 3.32 indicating low bankruptcy risk. Also, its three-year book growth rate pings at 15.2%, above nearly 78% of the industry. In the trailing year, Unilever carries a net margin of 12.74%. This stat helps undergird the company’s forward yield of 3.72%. Lastly, Argus Research pegs UL as a buy. It assigned a price target of $60, implying over 22% upside potential.
Mercury General (MCY)
When it comes to boring stocks to buy, it doesn’t get much more boring than Mercury General (NYSE:MCY). Frankly, people don’t get up in the morning excited and refreshed because of their insurance policies. No, you typically don’t want to encounter incidents where insurance policies become necessary. Put another way, Mercury and its ilk offer more relief than any other emotion.
Still, during these difficult times, relief is exactly what consumers want. Along with the Covid-19 pandemic, the banking sector fallout represents another reminder of why financial protection commands a premium. At any moment, the rug could be pulled underneath us. Thus, moving forward, households will likely pay more attention to this sector, perhaps even levering up their coverage.
To be fair, Mercury doesn’t offer the greatest financial profile. That said, for risk-takers, MCY could be intriguing because of its undervalued status. For example, the market prices MCY at a trailing sales multiple of 0.47. As a discount to revenue, Mercury ranks better than 76.34% of the competition.
Finally, Raymond James’ Charles Peters pegs MCY as a buy. As well, the analyst forecasts a price of $45, implying nearly 50% upside potential.
This post originally appeared at InvestorPlace.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.