The last month has been an extremely turbulent time for the FTSE 100, with the UK?s leading index losing 5% of its value during the period. Reasons for the fall include major uncertainty surrounding the ending of the US Federal Reserve?s monthly asset repurchase programme, continued woes in the Eurozone and further uncertainty in Eastern Europe and the Middle East.
So, with none of those issues looking likely to disappear in the short term, now could be a good time to stabilise your portfolio….
The last month has been an extremely turbulent time for the FTSE 100, with the UK’s leading index losing 5% of its value during the period. Reasons for the fall include major uncertainty surrounding the ending of the US Federal Reserve’s monthly asset repurchase programme, continued woes in the Eurozone and further uncertainty in Eastern Europe and the Middle East.
So, with none of those issues looking likely to disappear in the short term, now could be a good time to stabilise your portfolio. With that in mind, here are three stocks that could fit the bill.
Although shares in Diageo (LSE: DGE) have posted disappointing returns during 2014 (they are currently down 13%), their beta of 0.8 could provide stability moving forward. Indeed, a beta of 0.8 means that shares in Diageo should move by 0.8% for every 1% move in the wider index, thereby producing a less volatile experience.
Furthermore, with the sale of alcohol usually holding up well even during the darkest economic and political periods, Diageo could prove to be a consistent defensive play. With shares in the company trading on a price to earnings (P/E) ratio of 17.5, they look good value by historical standards and could move higher.
Over the last month, shares in National Grid (LSE: NG) have fallen by less than 3%, which highlights the defensive merits of the company. Indeed, National Grid has a beta of just 0.6 and, with a highly consistent and visible earnings profile, could prove to be a sound defensive play.
In addition, National Grid is aiming to increase dividends per share in-line with inflation, which should prove a hedge against higher rates of inflation in future. With shares in the company currently yielding 4.9%, they offer strong income prospects now, as well as in future years.
With a beta of 0.4 and a yield of 5.7%, Centrica (LSE: CNA) looks like the ideal defensive stock. Certainly, it’s a company worth owning during turbulent periods in the FTSE 100. However, with one third of its business being in exploration, it has perhaps more growth potential than many of its rival domestic energy suppliers and other utilities.
For example, Centrica is due to increase earnings by 12% next year and, with political risk from a change in government being priced in, this means that Centrica trades on a price to earnings growth (PEG) ratio of just 1.1. This indicates growth at a reasonable price to go alongside the stock’s impressive defensive merits.
Of course, Diageo, National Grid and Centrica aren't the only shares that could be worth owing right now. So, which others should you buy, and why?
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