For those that want to stay in the market during these ambiguous times, investors should consider safe stocks to buy. Basically, as Wall Street rotates away from risk-on assets, companies exclusively tied to growth and little else run the risk of suffering sharp losses. At the same time, when discussing safe stocks to buy, you often hear a list of the usual suspects.
And while those ideas have considerable merit, I decided to change things up with less-orthodox ideas for portfolio protection. Each of the ideas below features a broad range of attributes tied to fiscal stability, and strong cash relative to debt and offers a decent value proposition. So, if you’re looking for safe stocks to buy that can also be rewarding, you’ve come to the right place.
A semiconductor photomask manufacturer, Photronics (NASDAQ:PLAB) carries enormous “background” relevancies for the broader technology space. A photomask is an image-transferring tool comprising solid, transparent substrates such as glass. Photronics offers critical services for the production of integrated circuits and flat panel displays. Still, the market doesn’t quite see the value, sending PLAB down over 9% since the start of the year.
That might be a mistake. According to investment resource Gurufocus, PLAB features 10 good signs, making it a candidate for safe stocks to buy. In summary, Photronics features strong operations, a great value in terms of book value and trailing-year sales, along with robust fiscal stability. As well, the company carries a cash-to-debt ratio of 11.04, ranked above 71.82% of its peers.
However, PLAB also makes a case for safe stocks to buy because of its operational prowess. For example, its three-year revenue growth rate comes in at 19.2%, above 68.81% of sector rivals. Its EBITDA growth rate during the same period lands at 38.7%, above 73.06%.
CompX International (CIX)
Headquartered in Dallas, Texas, Compx International (NYSEAMERICAN:CIX) is a diversified manufacturer of engineered, quality components suited to its enterprise-level clients’ needs. While CIX might not grab business headlines constantly, it quietly undergirds multiple components of the economy. Here, Wall Street understands what’s up, sending CIX higher to the tune of over 7% on a year-to-date basis.
As with Photronics above, Compx benefits from 10 good signs, according to Gurufocus. However, it also comes with a single red flag, which stems from a decline in gross margins. However, the good far outweighs the bad. In particular, Compx features strong operational efficiencies, expanding operating margins, consistent growth in revenue per share, and very robust fiscal stability.
Also, insiders have been buying up CIX stock. Usually, there’s only one reason for insiders to acquire their own company’s shares: they see the price moving higher. Combined with a low earnings multiple of 10.62, you’d be hard-pressed not to include CIX as one of the safe stocks to buy.
Evolution Petroleum (EPM)
Based in Houston, Texas, Evolution Petroleum (NYSEAMERICAN:EPM) is an independent energy company focused on its ownership of and investment in onshore oil and natural gas properties in the U.S. To be sure, the hydrocarbon energy market has been relatively deflated this year. Still, as geopolitical conflicts along with rising demand profiles in other countries start accelerating, EPM could get interesting.
Also, on the financial front, Evolution provides solid reasons why investors can have confidence in holding EPM. According to Gurufocus, the company enjoys four good signs, which include operational efficiencies and strong fiscal strengths. To be fair, the company did incur some pressure in terms of gross and operating margins declining.
Still, the operational front overall looks encouraging. The company’s three-year revenue growth rate pings at 35.9%, above 88.65% of its peers. Also, its EBITDA growth rate during the same period lands at 25.2%, above 64.52%. For value, the market prices EPM at a trailing multiple of 5.65. As a discount to earnings, Evolution ranks better than 61.63% of the competition. Thus, it’s another example of safe stocks to buy.
Epsilon Energy (EPSN)
Also hailing from Houston, Epsilon Energy (NASDAQ:EPSN) is a North American on-shore focused independent oil and natural gas company engaged in the acquisition, development, gathering, and production of oil and gas reserves. Again, Epsilon trades in a disappointing market environment, losing 20% YTD. However, a shift in global policies or events could get EPSN back on track.
While it might be an ultra-small enterprise (featuring a market capitalization of less than $118 million), EPSN makes an objective case for safe stocks to buy. For one thing, Epsilon carries a massive amount of cash relative to its debt level. Additionally, the company’s equity-to-asset ratio pings at 0.84, ranked well above the sector median stat of 0.5 times.
Operationally, Epsilon’s three-year revenue growth rate stands at 44.8%, above 92.13% of its peers. Also, during the same period, its EBITDA growth rate clocks in at 46.3%, above 82.32%. Finally, the market prices EPSN at a trailing multiple of 3.38. As a discount to earnings, Epsilon ranks better than 78.07% of the competition.
Check Point Software (CHKP)
An American-Israeli enterprise, Check Point Software (NASDAQ:CHKP) provides combined hardware and software products for IT security. This business service includes network security, endpoint security, cloud security, mobile security, data security, and security management. As cybercrimes accelerate, companies realize that an ounce of prevention is better than a pound of cure. Fundamentally, then, CHKP ranks among the safe stocks to buy.
While the broader tech space – including cybersecurity – has suffered some blows over the past year, Check Point enjoys robust financial metrics. Gurufocus points out that the company benefits from 10 good signs. In summary, Check Point commands operational efficiencies, and strong fiscal stability and appears to be undervalued relative to key metrics.
Operationally, Check Point commands a three-year revenue growth rate of 12%, ranked above 61.3% of its peers. For profitability, the company’s trailing-year net margin stands at 34.49%, above 97%. Finally, the market prices CHKP at a forward multiple of 15.03. As a discount to projected earnings, Check Point ranks better than 73.13% of companies listed in the software industry.
Kulicke & Soffa Industries (KLIC)
A fundamentally underappreciated semiconductor firm, Singapore’s Kulicke & Soffa Industries (NASDAQ:KLIC) deserves close attention as one of the safe stocks to buy. Per its website, the company specializes in developing cutting-edge semiconductor and electronics assembly solutions enabling a smarter and more sustainable future. Since the start of this year, KLIC gained 9%. However, in the past month, it’s down 3%.
Fortunately, the red ink might represent a discounted opportunity. Right now, the market prices KLIC at a trailing multiple of 13.01. As a discount to earnings, Kulicke ranks better than 66.52% of its semiconductor peers. Also, KLIC trades at 10.36 times free cash flow. In contrast, the sector median stat clocks in at a much loftier 22.67 times. Financially, Kulicke benefits from a robust cash-to-debt ratio of 15.68, ranked better than nearly 75% of its peers. On the operational side, KLIC sees its three-year revenue growth rate hit 44.2%, above almost 93% of sector rivals. Thus, it’s well worth considering for safe stocks to buy.
Just to be clear, based on pure chart performance, biotechnology firm BioNTech (NASDAQ:BNTX) might not immediately strike investors as one of the safe stocks to buy. Since the start of the year, BNTX crumbled to the tune of over 29%. A winner regarding the Covid-19 vaccine race, sales of the shot slid, according to Reuters. Frankly, with fading Covid fears, this dynamic was to be expected.
However, what Reuters also pointed out was BioNTech’s strong cash and receivables position of 18.6 billion euros ($20.55 billion) at the end of March. As well, the company’s pursued a string of takeovers and alliance deals to broaden its work on cancer treatments, stated the news agency. Additionally, the market prices BNTX at a forward multiple of 20.52. As a discount to projected earnings, BioNTech ranks better than 66.67% of companies listed in the biotech space. Thus, forward-looking investors might see an opportunity with BNTX, potentially making it one of the safe stocks to buy.
On the date of publication, Josh Enomoto did not have (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.