As concerns continue to rise about debt levels and interest rates, investors are flocking to safer investment options. If consumer spending dries up as a result of more challenging economic conditions, many companies will see softer sales and lower earnings. However, not all stocks and industries will feel the pain. Below are three stocks that could weather the storm and still be good long-term buys.
RioCan Real Estate Investment Trust (TSX:REI.UN) has a diverse portfolio of retail assets across the country. While some investors might be concerned about the risk involved in the stock given that it has many shopping center locations, RioCan has shown an interest in changing how they look and being open to more mixed-used spaces to help minimize the company’s exposure.
A quick look at Riocan’s financials shows us that the company has also been very consistent over the past five years. While there have been some fluctuations, investors shouldn’t expect big swings from RioCan’s sales. It has also recorded a solid profit during that time as well, and although there have been greater fluctuations in its bottom line, they’ve mainly been a result of other income and expenses. Operating income has been relatively stable, averaging over 57% of revenue for the past five years.
Waste Connections Inc (TSX:WCN)(NYSE:WCN) is another good option for investors seeking safety and stability. While waste management services won’t be a popular option for investors, they can provide a lot of consistency. The company’s business model makes it a bit easier for investors to forecast future sales and profits, as there’s normally a high amount of recurring customers that will ensure that there aren’t many big surprises along the way.
The one wrinkle when it comes to Waste Connections is that the company has also grown via acquisition. With lots of free cash flow being generated over the years, it has helped allow the company, which pays a nominal dividend of less than 1%, to focus on growing its business and creating value for shareholders.
The company has certainly done just that, with the stock rising around 50% over the past two years. Waste Connections is currently trading around its 52-week high and is showing no signs of slowing down.
Hydro One Ltd (TSX:H) also has a lot of predictability in its sales and profits. And with the Ontario government being a big shareholder, it helps to ensure that the company isn’t going to be taking on any significant risks either.
With its acquisition of a U.S. company looking to be over, Hydro One’s focus remains on the Ontario market. While investors may have missed out on a great growth opportunity south of the border, it exposes them to less risk as well.
Ultimately, safety is a big reason why investors will want to buy Hydro One, as the utility provider is a low-risk option for them to grow their portfolios. With the stock paying more than 4% in dividends every year, it’s not a bad option for investors who just want to sit back and watch their dividend income continue to accumulate without worrying about big swings in valuation.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor David Jagielski has no position in any of the stocks mentioned.