Regardless of how long your investing horizon is, it’s never a bad idea to have some of your capital in more conservative holdings, thereby allowing you to sleep soundly even if you are the most risk-tolerant investor. Should those companies offer decent dividends, all the better.
With this in mind, here are three lesser-known stocks that I think can be comfortably bought and held through good and bad times.
Massive market share
Small-cap kettle safety control designer and manufacturer Strix (LSE: KETL) has already done rather well for early holders since coming to the market a little over one year ago, rising 23% in value.
While there’s probably no danger of the share price boiling over, last month’s trading update was certainly reassuring. In addition to stating that the company’s performance so far in 2018 had given management confidence that results for the full year would be in line with expectations, the mention of “particularly strong performance in North America” bodes well for Strix’s growth ambitions.
Taking into account its already commanding 38% share of the global market in which it operates, low valuation (12 times forecast earnings) and chunky 4.2% yield — made possible by its strong cash flow conversion — Strix remains a mighty tempting proposition.
Although offering nowhere near the same kind of payouts, I’m equally bullish on the medium-to-long term prospects for veterinary services provider CVS Group (LSE: CVSG). That’s despite the share price taking a battering since last November after the company revealed it was experiencing difficulty in recruiting clinicians in the aftermath of the EU referendum result. The fact that management has already sounded a cautious note on full-year earnings (to be revealed in September) hasn’t helped sentiment.
Temporary issues aside, CVS still smacks of a quality company in a fragmented industry. In addition to owning a huge estate of veterinary surgeries, the Diss-based firm also has an online presence (selling food and medicines) and a number of pet crematoria, giving it a diversified earnings stream. Since we can safely assume that people will always spend money on their furry friends, this appears a far safer destination for your cash than many expensive, high-growth plays.
At almost 21 times earnings, CVS’s stock is still worth paying up for. Should things get worse before they get better, it’s surely time to get greedy.
Dull but decent
It might not hit the headlines but I think XPS Pensions Group (LSE: XPS) is another great pick for investors wanting a bit more stability in their portfolios, especially as its line of business will always be in demand. The product of the recent merger between Xafinity and Punter Southall, the £350m cap is now the UK’s largest pension consultant and administration firm.
Based on a predicted 160% rise in earnings per share, XPS shares currently change hands on a P/E of just under 17. A PEG ratio of 1, however, suggests great value for all the growth on offer.
It gets even better. While the nature of the sector that XPS operates in means that its share price won’t exactly double overnight, the 4% yield should appeal to those looking for dependable income. Based on analyst projections, this payout is likely to grow to a juicy 4.6% next year.
For those committed to pursuing the dream of early retirement, XPS may do your chances no harm at all.
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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.