After a dark start to last week, the market rebounded in typical fashion. But that doesn’t mean a risk averse stock or two isn’t worth a piece of your portfolio.
They should always be a part of your portfolio precisely because unexpected things like Evergrande crop up all the time. And at some point, the go-go growth we’ve seen year after year in the market will slow and big investors will start to rotate their holdings.
That’s when risk averse stocks pay off big. They aren’t the fastest growers, but they grow, in good and bad markets. They’re also mid-cap to small-cap companies that can thrive in good times, but also have established markets that keep them safe when times get a bit tougher.
The seven stocks here are from a number of different sectors, so they can help you plug any holes you may have in your portfolio. Each of these stocks is packed with plenty of upside and sleep-at-night safety. Oh, and the cherry on top? Each has an A-rating in my Portfolio Grader.
- Echo Global Logistics (NASDAQ:ECHO)
- Headhunter Group (NASDAQ:HHR)
- Joint Corp (NASDAQ:JYNT)
- Levi Strauss & Co (NYSE:LEVI)
- Information Services Group (NASDAQ:III)
- Riverview Bancorp (NASDAQ:RVSB)
- Encore Wire Corp (NASDAQ:WIRE)
Risk-Averse Stocks: Echo Global Logistics (ECHO)
When you have supply chain problems like the ones we’ve seen during the pandemic, it pays to have a logistics company on your side. From startups to major corporations, supply chain issues are front and center across the globe.
And given the uneven recovery, it remains crucial to have a modern logistics problem solver on your side when you’re moving products and materials across the oceans or across the country.
Launched in 2005, ECHO is headquartered in Chicago, a city that remains a major transportation hub for U.S. goods. It’s one of the smaller logistics companies out there with a market cap just above $1 billion. But given the rise in e-commerce, this is a busy area where smaller firms can grow or get acquired. It also doesn’t hurt that the U.S. Postmaster General is a major shareholder in a logistics company.
ECHO has gained 81% year-to-date yet trades at a current price-to-earnings ratio of 27x. The average P/E of the S&P 500, meanwhile, is just below 35x and the index has gained 17%.
Headhunter Group (HHR)
Unemployment isn’t just an issue in the U.S. Russia’s unemployment rate is down from 6.3% to around 4.5%. It’s higher for its Commonwealth of Independent States (CIS) neighbors.
HHR is the leading recruitment platform in Russia and also holds a significant position among CIS countries. It was rated the No. 3 most visited job and placement website in the world in February. HHR is also active in the Baltic nations.
This is a meat-and-potatoes business, but its dominance in Russia and the CIS is a pretty unassailable position, which makes it a solid investment.
Its market cap is near $2.6 billion and HHR stock has performed well, up 71% year-to-date. It’s a bit expensive relative to its current P/E, but there’s plenty of room for it to grow.
Risk-Averse Stocks: Joint Corp (JYNT)
There are two things that are interesting about JYNT. First, its model of organizing chiropractors under one shingle is a completely unique effort. And it’s a very smart move, since most chiropractors work as independents, which makes it difficult to market effectively.
Second, JYNT operates as a franchise business, so groups of chiropractors in an area can buy their own The Joint Chiropractic storefront. This gives each franchisee the power to market nationally as well as locally to build their business and professional network.
For JYNT it means they don’t have to risk opening clinics around the country without knowing the local dynamics. It exposes the company to less risk and steady upside as it grows.
JYNT is growing like kudzu. The stock is up 281% year-to-date, which gives it a pretty high P/E, but it’s much lower than that growth. At these levels it’s still a risk averse stock because it has no competition and plenty of runway left.
Levi Strauss & Co (LEVI)
It wasn’t long after the Gold Rush hit California that LEVI was supplying the hopeful miners with tough denim pants and clothing to work their claims. And the company has stuck to its knitting (pardon the pun) since then.
Talk about a risk averse stock. Making jeans since 1853. But that doesn’t mean it has been an easy road. There are plenty of competitors that rise up every decade, especially now that global trade has opened up. And margins are always tight, so you need a strong brand and standard-bearing product to stay in the game for nearly two centuries.
LEVI has seen its share of ups and downs, but in a jean-loving culture, both in the U.S. and abroad, LEVI is still an iconic brand with sales to back it up.
Its $10 billion market cap keeps it ahead of the competition, and the stock is up 31% this year, with a current P/E around 35x.
Risk-Averse Stocks: Information Services Group (III)
Three big words in enterprise management these days: digital transformation service. That’s what III is all about. And it currently works with 75 of the top 100 global enterprises.
What does it mean? It means if you’re a business looking to move your in-house data management to the cloud, hybrid cloud, private cloud or expand you internet of things (IoT) capabilities or upgrade almost any aspect of your organization, III is who you hire.
There are more than a few companies can do this. And there are even more that can offer one or more of III’s services. But III is a one-stop shop. And that streamlining is becoming very attractive.
And that’s what makes it an attractive, risk averse stock. This trend will continue to expand through the enterprise sector and then down the chain. The stock is up 122% year-to-date, yet still trades at current PE of 35x. And it only has a market cap $362 million, so expanding economic growth will bolster III mightily.
Riverview Bancorp (RVSB)
In a time of rising interest rates, one of the most risk averse stocks you buy is a good community bank stock.
Because good, conservative community banks make most of their money off the difference between what they can borrow for and the rate they can get for the money they loan.
Low rates help borrowers, not lenders. Higher interest rates help grow banks’ margins. And smaller banks don’t have massive trading desks or investment banking divisions. They still make money the time honored way — deposits, borrowing and lending.
RVSB is a quality community bank in the Pacific Northwest, with 19 offices located in Washington and Oregon. It has been around since 1934. And it’s rock solid.
For example, the stock is up 42% year-to-date, yet it has a current P/E of 10x. And it has a 2.8% dividend yeild, which is far better than CD rates anywhere.
Risk-Averse Stocks: Encore Wire Corp (WIRE)
Any building you’re in has a lot of something you might not think about — copper. Every building has wires and those wires are usually made from copper. Commercial, residential, industrial … they all need wires.
WIRE makes copper wires for buildings. And when there’s a demand-driven housing boom, that means copper is in great demand. Also, a major push on infrastructure upgrades and rebuilds also means long-term copper demand. It also makes aluminum wire.
No, it’s not sexy but it is a core building material and WIRE has been in the game for a while. And that’s all it does. That’s a key component of good risk averse stocks — stick to your knitting.
WIRE is nearing a $2 billion market cap now that the stock is up 72% year-to-date. It still has a single-digit current P/E of 7x.
On the date of publication, Louis Navellier has positions JYNT, LEVI,III, and WIRE in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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