Today I’m looking at four stocks I believe have terrific defensive qualities.
Slowing smartphone adoption across the globe has seen investor appetite for device titans like Apple trend lower recently.
But Cambridge microchip maker ARM Holdings (LSE: ARM) has proved immune to these pressures. Indeed, shares in the stock have surged to their highest since last December amid frantic, post-Brexit safe-haven buying.
Sure, falling phone demand remains a worry for ARM, the segment being a major revenues driver for the business. But the growing popularity of the firm’s technologies in other fast-growing sectors gives stock pickers confidence that earnings can keep shooting higher.
The City expects earnings at ARM to surge 44% in the current fiscal year alone. And I reckon a subsequent P/E rating of 27.8 times — while heady on paper — is fully justified given the company’s exceptional growth prospects.
Cook up a fortune
Takeaways have always been part and parcel of British culture irrespective of the broader economic climate. And I believe Just Eat (LSE: JE) should continue delivering hefty returns regardless of what problems a British exit from the EU vote may bring.
Only last month Just Eat, which acts as the online middleman between hungry customers and eateries, hiked its revenues and profits forecasts as orders continued to explode.
And the company’s global expansion scheme should take the heat out of any moderation in UK economic growth — Just Eat also expanded in Italy, Brazil and Mexico in recent months.
A prospective P/E rating of 40.9 times may be a tad heady for some investors, created by an expected 58% earnings surge. But I reckon Just Eat’s terrific momentum deserves a premium rating.
A mighty pick
I believe the diversified nature of Mitie Group’s (LSE: MTO) operations make it a great bet for those seeking reliable growth in uncertain times.
From supplying administrative staff to checking fire alarms and providing catering solutions, Mitie deals in an array of essential services to keep companies across the globe up and running across a variety of industries.
This has enabled Mitie’s earnings to keep on rising, and a further 1% rise is pencilled-in for the current period. And a consequent P/E rating of 10.4 times represents unmissable value, in my opinion.
Toast tasty returns
I reckon Diageo (LSE: DGE) also has what it takes to shake off the fallout of the leave vote through its extensive geographical footprint. The company’s operations are spread across the robust North American marketplace as well as hot growth regions of South America and Asia.
On top of this, investors can take heart from the unrivalled popularity of labels such as Johnnie Walker whisky and Captain Morgan rum. The formidable brand power of such products allows Diageo to lift prices regardless of the broader economic climate without fear of sagging demand.
And Diageo is ploughing vast sums into the marketing and development of these brands to keep sales ticking higher.
The City expects Diageo to punch an 8% earnings advance for the year beginning July 2017. And I reckon a subsequent P/E rating of 18.6 times is splendid value for a stock of Diageo’s calibre.
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Times of macroeconomic uncertainty like these mean that picking the 'right' stock can be more difficult than usual, even if I believe Diageo et al are on course to generate sterling returns.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings and Diageo. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.