Bulletproof stocks might seem like an overly cautious framework based on the latest market and economic print. For example, in the first half of this year, the S&P 500 gained over 16% of equity value. Such a robust performance implies investors don’t need to sound the alarm. Nevertheless, forward indicators may encourage consideration of long-term stock investments.
Sure, on paper, the June jobs report demonstrated that new employment opportunities came in below economists’ expectations. While a positive from the Federal Reserve’s perspective of its ongoing battle with inflation, two factors come to mind. First, the unemployment rate declined, and second, month-to-month wage growth remained steady. These elements suggest an upcoming pivot toward reliable stocks.
Fundamentally, what we still have in the economy is a case of more dollars chasing after fewer goods. In other words, it’s time for the Fed to truly get serious about curbing inflation. Inherently, this sentiment involves raising the benchmark interest rate. That’s bad news for risk-on assets but possibly great news for stocks to own forever.
Photronics (PLAB)
One of the “background” players of the technology sector, Photronics (NASDAQ:PLAB) is a leading worldwide manufacturer of integrated circuit and flat panel display (FPD) photomasks. Per its public profile, photomasks are a key element in the IC and FPD manufacturing process. Again, it’s a background player. Photronics might not be a household name but it’s part of the lifeblood of the broader tech ecosystem.
As well, PLAB ranks among the bulletproof stocks to own forever or at least for a long time. Built to last, Photronics features a robust cash-to-debt ratio of 14.57 times. In contrast, the sector median for the semiconductor industry sits at 1.98, meaning that the company ranks better than 74.82% of its peers. Also, its debt-to-equity ratio comes in at 0.03 times, favorably below 86.14% of the competition.
Not only that, Photronics features a three-year revenue growth rate on a per-share basis of 19.2%, above 67.63% of sector players. Also, its EBITDA growth rate lands at 38.7%, above 71.69%. Despite these impressive stats, PLAB trades at 1.78 times sales, ranked better than nearly 66% of its rivals. Thus, it’s one of the long-term stock investments at a discount.
Arch Resources (ARCH)
Based in St. Louis, Missouri, Arch Resources (NYSE:ARCH) is a premier producer of high-quality metallurgical products for the global steel industry. According to its corporate profile, Arch operates large, modern, and highly efficient mines that consistently set the industry standard for both mine safety and environmental stewardship. Still, you might not think that a coal mining and processing specialist targeting the steel industry would rank among the bulletproof stocks to buy.
Nevertheless, on an objective basis, Arch appears as one of the reliable stocks ahead of potential market uncertainty. For example, its cash-to-debt ratio clocks in at 1.5 times, ranking better than 73.55% of companies listed in the steel industry. Also, its equity-to-asset ratio comes in at 0.6 times, above the sector median of 0.52 times. What’s more, Arch’s Piotroski F-Score prints 8 out of 9, indicating high operational efficiency. Plus, its Altman Z-Score hits 5.53, indicating fiscal stability and low bankruptcy risk.
Finally, ARCH makes a case for low-risk stocks thanks to its strong profitability metrics. Its operating and net margin come in at 28.07% and 33.73%, respectively, ranked at least better than 95% of its peers.
Epsilon Energy (EPSN)
Headquartered in Houston, Texas, Epsilon Energy (NASDAQ:EPSN) is a North American onshore natural gas production and midstream company with a current focus on the Marcellus Shale of Pennsylvania and the Anadarko Basin in Oklahoma. To be fair, Epsilon might not readily come to mind as one of the bulletproof stocks to buy. With the hydrocarbon energy sector soft this year, EPSN has been disappointing.
Since the January opener, Epsilon shares fell almost 15%. Nevertheless, Gurufocus labels the enterprise as significantly undervalued. In part, EPSN trades at a trailing multiple of 3.91. As a discount to earnings, Epsilon ranks better than 75.63% of companies listed in the oil and gas industry.
However, as one of the long-term stock investments, Epsilon offers an enticing argument with its balance sheet. Specifically, its cash-to-debt ratio stands at 90.53 times, ranked above 82.73% of its rivals. Also, its equity-to-asset ratio comes in at 0.84 times, better than 86.82%. Notably, Epsilon also features a Piotroski F-Score of 8 out of 9, reflective of high operational efficiency. Lastly, its Altman Z-Score of 5.57 means that no one should hold their breath regarding imminent bankruptcy.
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.
