With the situation in Ukraine continuing to create uncertainty for investors, more stable, less volatile stocks could become more sought after. Indeed, the FTSE 100 has fallen by 2.5% in the last two weeks alone, which shows that uncertainty can hit share prices hard in a short space of time. With that in mind, here are three companies that could prove to be safer havens during troubled-times than most of their peers.
SSE
Although SSE (LSE: SSE) comes with a substantial amount of political risk via the potential for price freezes following the next general election, its business model should continue to be robust. Indeed, over the last five years it has been able to grow profits in four of them, with the bottom line being flat in 2012. Furthermore, utilities are generally highly defensive and, during periods of uncertainty, can become more attractive than their peers. This means that they could outperform in the short run, with SSE’s yield of 6.1% being among the highest in the index and helping to make the company a strong defensive play during uncertain times.
Imperial Tobacco
As with utilities, demand for tobacco tends to remain robust during economic rain or shine. That’s partly what makes Imperial Tobacco (LSE: IMT) such an attractive buy at the moment. In addition, shares in the company currently trade on a price to earnings (P/E) ratio of just 12.4, which is nicely below the FTSE 100’s P/E of 13.4. In addition, they offer a yield of 5.1% which remains among the highest in the index. If that isn’t enough, a beta of 0.6 means shares in Imperial Tobacco should (in theory) fall by 0.6% for every 1% fall in the wider index, which provides further evidence of their strong defensive properties.
Royal Mail
Although the internet has hurt letter deliveries, it has created a boom for parcel companies. That’s what’s causing Royal Mail (LSE: RMG) to be on track to increase its bottom line by 28% this year and by 14% in the following year. However, Royal Mail is more than just a growth play — it also offers significant defensive properties too. For instance, it has a beta of just 0.4, meaning shares should (in theory) fall by just 0.4% for every 1% fall in the wider index. Meanwhile, it offers a yield of over 5% at current prices and, with a P/E of only 12.2, looks good value, too.
