I’m not going to pretend. I have no idea will happen in the 2020s. The way things look today, we could see some dramatic changes in the world – not all of them good.
On the other hand, history suggests that there have been many uncertain times in the past. More often than not, we muddle through. Everyday life remains largely unchanged.
The stocks I want to write about today have been chosen with this in mind. Each company has a record of generating strong returns for shareholders from life’s essentials.
An affordable pleasure
When I was a child, I drank a lot of orange squash. As I got older, I tried other soft drinks. Today I see my young niece and nephew doing exactly the same.
My first pick, FTSE 250 firm Britvic (LSE: BVIC), has been making affordable soft drinks since the 1930s. Its own brands include Robinsons, J2O, Fruit Shoot, Purdeys and R White. Britvic also produces brands such as Pepsi, Pepsi MAX, and Gatorade under licence from PepsiCo.
Britvic’s core attraction is that its products seem to have an evergreen appeal to a large segment of the population. Over the years, this has translated into strong financial performance.
Profits were hit last year by a restructuring programme. But analysts expect performance to improve over the next two years. The shares now trade on about 15 times 2020 forecast earnings, with a 3.7% yield. I think this could be a good entry point for long-term investors.
Catch the bus
My next pick is bus and train operator Go-Ahead Group (LSE: GOG). This may seem an unlikely choice, but I reckon this company has several points in its favour.
On an operational level, it’s one of the largest public transport operators in the UK. Go-Ahead is the largest bus operator in London and handles 30% of all train passenger journeys in the UK. In total, one billion passenger journeys are made every year on Go-Ahead bus and rail services.
These services aren’t always trouble-free. But the group’s financial performance has been surprisingly robust over the years, and the dividend has never been cut. Since the group’s flotation in 1994, shareholders have seen their annual payout rise from 4.8p per share to 102p per share. That’s an increase of more than 2,000%.
GOG stock looks reasonably priced to me, with a price-to-earnings ratio of 13 and a dividend yield of 4.8%. I continue to rate the shares as a buy.
Essential services
My final pick is price comparison specialist Moneysupermarket.com Group (LSE: MONY). The financial products marketed by the group – such as credit cards, insurance, and utilities – are part of the fabric of life. Most of us can’t live without them.
The initial growth of this business was impressive. But the market is now maturing and Moneysupermarket – like its rivals – is investing in new services. These are aimed at adding new functionality and providing more personalised service. In some areas, customers will even be able to sign up to automated switching.
The size and market reach of this business suggests to me that it will remain a long-term winner in this sector. Profit margins of more than 30% mean that it’s largely debt-free and generates a lot of cash. Moneysupermarket remains on my buy list.
