Build A Winning Portfolio With Aviva plc, BAE Systems plc And AstraZeneca plc

Trying to construct a portfolio that’s built for the long-term, which will help you weather the market’s tantrums, can seem like an impossible task at first.  However, it isn’t really that difficult to construct an all-weather portfolio. All you need to do is invest in a number of large companies trading at attractive valuations, with illustrious histories and stable outlooks.

Aviva (LSE: AV), BAE Systems (LSE: BA) and AstraZeneca (LSE: AZN) are three such companies.

Indeed, Aviva has been around for more than a hundred years and while the company has had some troubles recently it’s well-placed benefit from the UK’s ageing population. BAE is the UK’s premier defence contractor, and, due to the nature of the company’s business, it has few competitors.

Lastly, AstraZeneca has fallen on hard times recently — the company has struggled to replace old products coming off patent with newer treatments, to maintain sales growth. Nonetheless, despite the short-term headwinds facing the company, AstraZeneca has a vast portfolio of drugs under development and these treatments should help return the company to growth when they’re put into production. 

Time to take a look?

So, why should you consider Aviva, BAE and AstraZeneca for your portfolio? 

Well, as mentioned above all three of these companies have specific traits that will help them continue to report steady growth. What’s more, each of these companies has a leading position in the market it operates within — and that can be seen in each company’s equity returns during the past three years. 

For example, Aviva’s shares have returned 28% since the beginning of 2013 (excluding dividends). BAE’s shares have returned 40% (excluding dividends) and AstraZeneca’s have returned 33% (excluding dividends), both  since the beginning of 2013. Over the same period, the FTSE 100 fell 4%, and the FTSE 250 gained 21% (once again both are excluding dividends).

Aviva, BAE and AstraZeneca’s returns since the beginning of 2013 show that these companies can continue to rack up gains for investors even in sluggish markets.

Attractive valuations

The good news is that Aviva, BAE and AstraZeneca are all trading and attractive valuations right now.

Aviva is currently trading at a forward P/E of 9.5. Earnings per share are expected to grow 18% this year and based on this forecast the company is trading at a PEG ratio of 0.5. The shares support a dividend yield of 5.2%.

BAE is currently trading at a forward P/E of 12.8. The company’s earnings per share are expected to fall 3% this year, but pre-tax profit is expected to increase by nearly 50% to £1.5bn. BAE’s shares currently support a dividend yield of 4.2%.

Finally, there’s AstraZeneca, which is currently trading at a forward P/E of 14.3, making it the most expensive company in this article. Earnings per share are expected to fall by 8% this year, remain constant during 2017 and then begin to expand again during 2018. In other words, AstraZeneca is a long-term play suitable for the patient investor. The company shares support a dividend yield of 4.8%, and this payout looks safe for the time being — so investors will be paid to wait for Astra’s recovery.

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