Editor’s note: “9 Boring Stocks to Buy You Should Never Let Go Of” was previously published in June 2020. It has since been updated to include the most relevant information available.
Following the worst of the novel coronavirus pandemic, the economy showed signs of significant improvement. First, the May jobs report came in well above expectations with 2.5 million jobs added. Later, the retail sales report for that month confirmed a surge in consumer activity. Therefore, some investors turned away from boring stocks to buy and focused on more exciting fare.
However, the latest read on weekly initial jobless claims gave everyone a harsh reality check. Another 1.4 million Americans filed for unemployment benefits. This was the 19th consecutive week with more than one million claims, signaling that economic damage was spreading to multiple employment sectors.
That’s a very large number that requires government assistance. And it repudiates the idea that the economy is back on its legs and that no further assistance is necessary. For investors, this translates into not giving up on boring stocks to buy.
If that wasn’t enough, we have the most worrying development: rising novel coronavirus infections. Recently, the U.S. recorded a record high in terms of new daily infections. In addition, Texas halted its reopening protocol to combat its hot spots. California took a similar move, reinstating a stay-at-home order for Imperial County, the worst-hit county in that state.
Finally, every portfolio, even for young investors, should have some exposure to boring stocks. You’re simply not going to win them all, and these established names should provide some downside mitigation.
So, without further ado, here are nine boring stocks to buy.
Chances are, if you’re thinking about technology names, IBM (NYSE:IBM) doesn’t come to mind; that is, unless you were discussing legacy names that were relevant in the pre-internet era. As a result, IBM stock has been among the most boring of boring stocks to buy.
Nevertheless, this is a situation where Big Blue’s (negative) reputation precedes it. True, IBM stock has failed to inspire investors despite many shifts in strategy. Further, more exciting tech firms have overshadowed the legacy company.
However, with IBM’s acquisition of Red Hat, management is making a credible push into cloud computing for large enterprises. Specifically, the company has invested heavily in Kubernetes, a container-based cloud protocol that allows unprecedented scale and efficiency.
With this Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)-developed innovation, end-users can share applications in self-contained data packages, thus eliminating the need for everyone to download the same system architecture. It’s a massive step forward in cloud technologies, thereby providing a long-term lift for IBM stock.
Best of all, Big Blue marshaled its technical acumen and resources for the betterment of society, partnering with the White House and other scientific institutions to help stem the spread of the coronavirus.
Additionally, the pandemic has breathed new life into the company’s artificial intelligence business, enabling client corporations to save costs and navigate this unprecedented crisis. It may be boring but I see big things ahead for IBM stock.
Lowe’s Companies (LOW)
Home improvement retailers like Lowe’s Companies (NYSE:LOW) are always relevant, no matter what the market or economic condition. But the coronavirus suddenly gave boring stocks to buy like Lowe’s a boost of excitement.
With the personal savings rate having hit a record 33%, cash-hoarding Americans, when they do buy, are only spending on essentials. That right there lifts the case for LOW stock.
Another factor giving Lowe’s a long though unfortunate upside pathway is that 2020 is probably going to be a biblical year – and I mean that in a fire and brimstone sort of way. According to the National Oceanic and Atmospheric Administration, we may have an abnormally active hurricane season. Needless to say, this is absolutely the last thing America needs right now.
Obviously, there’s no easy fix for yet another calamity. And that’s not including the possibility of a second wave of coronavirus, which is becoming more of a reality. The best that everyday folks can do is to be prepared. Therefore, while the case for LOW stock is a cynical one, it’s also incredibly crucial.
Raytheon Technologies (RTX)
Although most investors probably wouldn’t classify Raytheon Technologies (NYSE:RTX) as one of the boring stocks to buy, the defense sector at one point lost significant buyer sentiment. Obviously, with the coronavirus infecting people throughout the world, attention has shifted from killing each other to saving ourselves.
Still, you wouldn’t want to ignore RTX stock during this crisis. Yes, Raytheon has seen its market value gutted relative to its pre-pandemic highs. But it’s also an opportunity to buy a long-term relevant company at a discount.
Not surprisingly, our adversaries – namely, Russia, China, Iran and North Korea – have tested our defensive response capacities during this crisis. Thus, while society is focused almost entirely on the coronavirus, our armed forces remain on high alert. Logically, this is a net positive for RTX stock.
Further, the devastation to the global economy has been felt more severely in developing countries or among nations that are levered mostly to one commodity. In this case, I’m talking about oil.
Finally, we’re seeing conflicts spark across the world, including a border clash between China and India, and North Korea blowing up a liaison office which served as a de facto embassy of South Korea. Thus, with so much that can go wrong, Raytheon is currently one of the deceptively boring stocks to buy.
Xcel Energy (XEL)
As a utility firm specializing in electric and natural gas services, Xcel Energy (NASDAQ:XEL) benefits from perpetual demand. Advanced technology doesn’t mean much if you can’t turn it on. And through this terrible time, utility firms have represented a lifeline to many struggling households. Over time, I expect XEL stock to work its way out of its funk.
Another compelling reason for patience with Xcel is its coverage area. Concentrated in the Midwest and viable states like Texas and Colorado, the utility firm can take advantage of potential long-term migration trends.
Many Americans have taken extreme measures to protect themselves against Covid-19, including temporarily sheltering in rural areas. But I’d bet that a significant portion of these temporary movers will do so permanently. Plus, brewing social unrest incentivizes a change of scenery.
As well, the possibility of a second wave of coronavirus has become more of a reality, with Apple (NASDAQ:AAPL) deciding to close some stores in Florida and Arizona due to a resurgence of cases. Recently, the U.S. hit nearly 45,000 new infections on June 26. This also might push some fence-sitters to make a firm decision.
Just as importantly, rural or countryside living is much more affordable than life in the big cities. Considering that we’re heading toward a very uncertain time, American families may be further incentivized to make the transition.
That would likely benefit XEL stock, given that the underlying company offers coverage in areas that big city dwellers, particularly millennials find attractive.
Iron Mountain (IRM)
A recognized brand in data storage and protection, Iron Mountain (NYSE:IRM) is probably the most dry investment in this list of boring stocks to buy.
Indeed, its physical paper-related businesses – including shredding services and document storage – seem anachronistic in this day and age. Ironically, though, digitalization makes IRM stock immeasurably viable.
Although companies like IBM are encouraging corporate clients to shift to the digital cloud, large enterprises will never stop using actual paper. That’s because digital data is too easy to exploit and compromise. And if something were to go wrong – data breach, infrastructural crisis, or an Act of God – a physical backup can help mitigate the overall damage. It’s one of the understated reasons why astute investors love IRM stock.
Furthermore, as a company grows, their paper record storage needs expand. Iron Mountain offers an easy solution, providing safe storage in an offsite location. Therefore, even if the target company is compromised, its documents will not be.
Unfortunately, being compromised is a very real threat. During this crisis, nefarious agents have wreaked havoc on unsuspecting victims, including those associated with critical infrastructures. Therefore, this pronounced need for security and safeguards is a huge, underappreciated catalyst for IRM stock.
Public Storage (PSA)
I love real estate. That said, this is a broad topic. Within this segment is perhaps one of the most boring categories of stocks to buy: self-storage units. Though reality TV shows have attempted to glitz up the industry, names like Public Storage (NYSE:PSA) simply represent a platform for people to store their stuff.
It’s hardly what would get you up in the morning. Nevertheless, PSA stock may have surprising upside later this year. According to a Wall Street Journal report, investors in 2019 were already eyeballing this sector. At the time, the Federal Reserve was lowering the benchmark interest rate to help cushion the blow of a possible global downturn.
With subterranean rates becoming the norm, PSA stock became a very attractive investment for its dividend yield. But how does the narrative change with the coronavirus pandemic?
Interestingly, if the Great Recession is a guide, the downturn may benefit Public Storage. As people downsize to more affordable homes, they need a place to store their extra stuff.
Further, the mass-scale looting from bad actors infiltrating the movement for justice incentivizes finding a secure location for valuable inventory. Thus, while PSA may be one of the most boring stocks to buy now, it may eventually lose that title.
Putting Kellogg (NYSE:K) on a list of boring stocks to buy shouldn’t offend anyone’s sensibilities. Aside from our breakfast table, we really don’t think too much about the company. As a largely secular company, K stock is good for solid dividends and for holding the fort in a downturn.
But that’s not the reason why I’m interested in K stock this time around. Instead, it’s the hype machine surrounding Beyond Meat (NASDAQ:BYND) and the rejuvenated plant-based meat industry. Supposedly, BYND is a transformative investment that can convert meat-eaters toward alternative meat. However, the problem is that real meat is almost universally flavorful to carnivores. Fake meat, though, has sharp critics.
But a bigger problem is scale and competition. Beyond Meat only produces fake meats. But Kellogg can disrupt this space through its MorningStar Farms subsidiary while not skipping a beat in its core markets.
Furthermore, the meat-shortage crisis may force some consumers to consider protein alternatives. Theoretically, this benefits BYND. However, I believe Kellogg’s superior scale will help give K stock the edge.
One last note – as food prices rise, hard-hit consumers will likely gravitate toward products that they can afford. As CNBC reported, consumers are shifting from stockpiling to penny-pinching. Given Kellogg’s brand name appeal, this crisis may give the company a new lease on life.
Philip Morris International (PM)
In many ways, the idea of buying Philip Morris International (NYSE:PM) during a health crisis seems completely counterintuitive. Primarily, smoking cigarettes causes long-term damage all on its own. Adding a contagious virus to the mix isn’t exactly a great selling point for PM stock.
However, that narrative was put to the test as smokers everywhere began stockpiling for a potentially long winter. But as the panic buying subsided, so too did the demand spike for popular cigarette manufacturers. So, does this put an end to PM stock?
Although it’s a risky bet, I believe that we could see a longer-term uptick in tobacco sales. As scientific studies have proven, quitting smoking is a tough endeavor with high cessation failure rates. Given how stressful this crisis has been, it’s reasonable to expect that many will turn to nicotine as a coping mechanism.
Also, with international central banks adopting inflationary measures to bolster their underlying economies, it’s difficult to get robust passive income. Thus, the generous dividend of 6.8% for PM stock is a big incentive.
CVS Health (CVS)
When e-commerce behemoth Amazon (NASDAQ:AMZN) wants to disrupt your industry, it’s almost always bad news for you. Retail pharmacy specialist CVS Health (NYSE:CVS) learned this the hard way last year. Combined with fiscal concerns such as a worrying debt load, CVS stock bled out.
Though Amazon’s encroachment is a serious challenge, CVS stock may have a moat. Like many other boring stocks to buy, CVS has a powerful brand identity. Additionally, the pharmacy has a vast physical footprint, with many locations open 24 hours.
Unless Amazon can offer immediate shipment, it simply can’t compete with CVS without investing onerous amounts of money. Additionally, the Covid-19 pandemic has bolstered the demand for on-the-spot purchases. Therefore, the underlying company likely has many years to mount a counteroffensive.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities.