As a tough macroeconomic and geopolitical calendar year edges closer to drawing to an end, fears of a stock market crash are still rife.
However, I’m not waiting for any crash to buy quality stocks for my holdings. I’m targeting Safestore (LSE: SAFE) shares when I have some investable cash soon. Plus, I’d like to buy more Topps Tiles (LSE: TPT) shares too. Here’s why!
Safestore is one of the largest self-storage firms in the UK. The business has a well-known brand and a good track record of performance and growth.
The shares have struggled this year but this is ideal for me to buy cheaper shares. As I write, they’re trading for 761p, down 16% from 911p at this time last year.
The biggest risk I believe could dent Safestore’s performance and shares is that of the increasing competition in the storage sector. There are quite low barriers to entry to the space. This means competitors with the right financial backing and leadership could enter the market to prize away Safestore’s dominant position.
However, I’m not worried about the risk mentioned. This is because Safestore has a wealth of experience when it comes to navigating this burgeoning market. It has continued to grow and dominate in the UK and its growth aspirations make it an exciting prospect for me. The business has recently opened European branches in Spain. Furthermore, a potential foray into the US – an underdeveloped storage market – could provide lucrative returns and growth.
At present, a dividend yield of close to 4% is enticing for me. However, I do understand that dividends are never guaranteed.
Finally, Safestore shares look great value for money on a price-to-earnings ratio of just six.
Topps Tiles is a tile and wood flooring retailer. The business sells its products from larger out of town retail units as well as online.
I’ve owned Topps shares for a short while now. On paper, my investment is down slightly but this is not an issue for me. I’ve received dividends that I’m reinvesting so far, plus, my five- to 10-year investing mantra means I’m not concerned about shorter-term performance.
Topps shares have meandered up and down for the past 12-months. They’re up 15% from 40p at this time last year, to current levels of 46p.
I reckon now is a good time for me to add some more shares to my holdings. A dividend yield of 8% makes the passive income opportunity alone worth it. Plus, share price volatility means they still look good value for money on a price-to-earnings ratio of just eight.
From a risk perspective, Topps is a small business with a large store presence. Maintaining and operating out of physical stores when online shopping is only rising could be a risky move going forward. However, I feel this is offset by its experience, wide reach, as well as its dominant market position with its solid brand power.
Topps has recorded positive performance for the past three years since the pandemic with each year providing growth. Although shorter-term performance could be dented by the current economic picture, I reckon the business will continue to provide passive income and grow in the longer term.