With the outcome of the Greek debt talks yet to be decided, it is difficult to know how much risk to take. In other words, if a deal is reached then the present time may prove to have been a superb buying opportunity. However, if Greece does default, then the stock market could fall by several hundred points.
For long term investors, though, the focus is on buying quality stocks at a fair price. And, on this front, there are a number of options available. For example, National Grid (LSE: NG) (NYSE: NGG.US) remains a top quality income stock with considerable defensive appeal. For example, it has a yield of 5.2% and a beta of 0.9, which means that its shares should be less volatile in terms of their price movements than the FTSE 100.
Furthermore, National Grid offers a relatively consistent earnings outlook and, as such, is a useful ally to have in a portfolio when the future is uncertain. And, with it having a price to earnings (P/E) ratio of 14.5, it offers very good value for money when you consider that a number of its utility sector peers trade on P/Es of over 20 and yield less than 4%.
Of course, another very defensive and consistent stock is Smith & Nephew (LSE: SN) (NYSE: SNN.US). The medical devices company has grown its bottom line in each of the last five years and, over the next two years, is set to continue this trend with increases in its earnings of 1% this year and 13% next year. And, unlike its pharmaceutical peers, demand for Smith & Nephew’s products is not subject to the ‘boom and bust’ cycle, whereby the loss of patents hurts its top and bottom lines to a great extent. This means that, in the long run, it should be a relatively stable stock and, as such, it trades on a rather high P/E ratio of 20.7, but still has huge appeal at the present time.
Meanwhile, one stock that seems to offer the perfect mix of growth, value and income prospects is Taylor Wimpey (LSE: TW). The house builder has seen its bottom line grow by over five times from 2011 to 2014 and, in the next two years, it is set to grow by a further 50% as a loose monetary policy increases demand for property at a time when there is a chronic undersupply in the market.
Furthermore, Taylor Wimpey also offers stunning income prospects. It currently yields 4.8% and, with such strong profit growth being forecast, it is likely that its shareholder payouts will increase at a rapid rate. As such, its yield could easily surpass that of National Grid over the medium term, while its share price could also move upwards due the scope for an upward rerating. In fact, Taylor Wimpey trades on a P/E ratio of just 12.9 which, given its excellent growth prospects, is very difficult to justify.
Therefore, while National Grid and Smith & Nephew are great stocks that are worth buying, Taylor Wimpey’s mix of growth, value and income potential mark it out as a superb opportunity for long term investors.
