The Motley Fool

Can You Beat A Volatile FTSE 100 With Royal Mail PLC, SABMiller plc And Safestore Holdings Plc?

Shares in Royal Mail (LSE: RMG) have risen by 4% today after it released an upbeat trading update. The company stated that its revenue increased marginally in the first three quarters of its current financial year, with growth from parcel delivery being encouraging and the performance of its GLS logistics division being relatively impressive.

In fact, parcel volumes were up 4% in the first nine months of the year, with 6% more parcels handled in December than in the same month in the previous year. GLS’s volumes were up by a better-than-expected 11% and, given the performance to date, Royal Mail isn’t expecting a decline in GLS’s margins for the full year. Although addressed letter volumes were down by 3%, this is a continuation of a long-term trend and is made up for by the strength of the parcels and GLS divisions.

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Looking ahead, Royal Mail is expected to grow its bottom line by 10% next year, which puts it on a relatively impressive price-to-earnings growth (PEG) ratio of just 1.2. With it having a relatively resilient business model and a beta of just 0.6, its shares look set to be a worthwhile purchase given the high degree of volatility in the market at the present time.

Minimising risk

Also offering defensive prospects are beverages company SABMiller (LSE: SAB) and storage company Safestore (LSE: SAFE). In the case of the former, it has today reported an upbeat set of quarterly results, with net producer revenue rising by 7% in the third quarter once unfavourable currency impacts have been adjusted for. This was led by a strong performance from Africa as well as in Europe, while North America posted a decline in top line performance.

With SABMiller being taken over by sector peer ABInbev, its shares are likely to offer some support against volatile markets. In fact, they’re little changed since the turn of the year and for more risk-averse investors, buying shares in alcoholic beverages companies could prove to be a sound move given their relatively resilient income stream and diverse range of products and geographies.

Also reporting today is Safestore, with its shares rising by as much as 4% due to continued improvements in its financial performance. Although the 126% rise in pre-tax profit for the year was mostly due to the increased gains it made on the value of its investment properties, Safestore was still able to post a rise in its top line of 7% during the period. Furthermore, Safestore’s occupancy rate rose from 69% last year to 73% at the end of October 2015, with like-for-like sales being up 9%.

With Safestore having a robust business model and a beta of only 0.7, it’s likely to outperform a volatile market in the short run. Evidence of this can be seen in its 3% outperformance of the FTSE 100 since the turn of the year. However, with Safestore having a P/E ratio of 19.1, it appears to be rather expensive and worth watching, rather than buying, at the present time.

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Peter Stephens owns shares of Royal Mail. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.