Volatile markets can be unsettling for investors. One strategy that can help you navigate through such times is to select “boring" stocks. Everybody has different ways of defining boring stocks. I'll say that these are stocks that are properly valued or undervalued and show a respectable growth rate over a 1-2 year period.
The benefit of this strategy can be explained with an analogy from golf. When you're playing a challenging course, the best advice is to play within yourself. It's not the time to take chances. You're trying to hit fairways and put the ball on the green in regulation. You may not make every putt, but you're likely going to avoid a blow-up hole that can ruin your round.
In the world of stocks, boring stocks aren't likely to provide tremendous growth. You shouldn't think of these as stocks you'll want to hold onto forever. But in volatile times, they can help you stay in the market without worrying about seeing your portfolio drop by 30% or more. You may get bored watching these stocks, but once the market conditions become more favorable for growth, you'll be glad these stocks left your portfolio in the green.
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- Kroger
- Kimberly-Clark
- Parker-Hannifan
- Iron Mountain
- Public Storage
- Concrete Pumping
- Aris Water Solutions
#1 - Kroger (NYSE:KR)
The Kroger Co. (NYSE: KR) is a great boring stock to lead off our list. The company operates in the consumer staples sector, which is a defensive sector that performs well regardless of strength or weakness in the U.S. economy.
Kroger just reported earnings that beat analysts’ expectations and provided full-year 2023 guidance that was well above analysts’ expectations. Analysts tracked by MarketBeat currently give Kroger a consensus Hold rating, but that could change after earnings.
As the last two years have demonstrated, even in the fact of historically high inflation, consumers will still buy groceries. And Kroger is benefiting as consumers increasingly turn to private label brands. In fact, on the conference call Kroger conducted after its fourth-quarter earnings report, chief executive officer (CEO) Rodney McMullen said that shopping at Kroger could be four times cheaper than dining out.
One concern would be the debt the company took on due to its merger with Albertson’s. But Kroger has no problem in the cash flow department and announced that it will be deploying that cash to deleverage rather than to buyback shares.
About Kroger
The Kroger Co operates as a food and drug retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys.
Read More - Current Price
- $57.61
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $60.09 (4.3% Upside)
#2 - Kimberly-Clark (NYSE:KMB)
Next on the list of boring stocks is Kimberly-Clark Corp. (NYSE: KMB). The company’s products are a staple at many of the nation’s leading retailers. That means that investors can count on this blue-chip stock to deliver consistent revenue and earnings quarter after quarter.
Kimberly-Clark has a profit margin of over 9.5% - well above the sector average. This highlights an advantage of investing in a company like Kimberly-Clark, specifically its pricing power.
That being said, KMB stock is up just 14.5% in the last five years. That’s not going to get many investors excited in a bull market. But when things get rough in the economy, investors can appreciate the company’s dependable results. And that includes the company’s dividend which currenly has a yield of 3.57%. Not to mention that Kimberly-Clark is a Dividend King having increased its dividend in each of the last 52 years.
About Kimberly-Clark
Kimberly-Clark Corporation, together with its subsidiaries, manufactures and markets personal care and consumer tissue products in the United States. It operates through three segments: Personal Care, Consumer Tissue, and K-C Professional. The company's Personal Care segment offers disposable diapers, training and youth pants, swimpants, baby wipes, feminine and incontinence care products, reusable underwear, and other related products under the Huggies, Pull-Ups, Little Swimmers, GoodNites, DryNites, Sweety, Kotex, U by Kotex, Intimus, Thinx, Poise, Depend, Plenitud, Softex, and other brand names.
Read More - Current Price
- $136.37
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $149.93 (9.9% Upside)
#3 - Parker-Hannifan (NYSE:PH)
Industries that support the defense industry typically do well in any market environment. One boring way to gain exposure to this sector is through a picks-and-shovel stock like Parker-Hannifan Corp. (NYSE: PH).
The Cleveland, Ohio-based company sells industrial products to OEMs and distributors serving the replacement parts markets. It serves the defense industry by supplying parts for military machinery. Its Aerospace Systems also serves military customers. The products are boring; the sector is considered part of the old economy. But when the economy slows down, the ability to generate reliable revenue and earnings stands out from the crowd.
Like many companies on this list, Parker-Hannifan is projected to show strong earnings growth. Specifically, analysts are expecting high single-digit earnings growth. That would support the Moderate Buy rating the stock receives from the analysts surveyed by MarketBeat.
And even if the company’s earnings fall a little short, the company has a solid dividend. The yield isn’t particularly impressive at under 1.5%. But the stock does reward investors with an annual dividend payout of $5.32 per share.
About Parker-Hannifin
Parker-Hannifin Corporation manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company operates through two segments: Diversified Industrial and Aerospace Systems. The Diversified Industrial segment offers sealing, shielding, thermal products and systems, adhesives, coatings, and noise vibration and harshness solutions; filters, systems, and diagnostics solutions to ensure purity and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors used in fluid and gas handling; and hydraulic, pneumatic, and electromechanical components and systems for builders and users of mobile and industrial machinery and equipment.
Read More - Current Price
- $690.43
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $688.07 (0.3% Downside)
#4 - Iron Mountain (NYSE:IRM)
Iron Mountain, Inc. (NYSE: IRM) is in the business of providing storage and information management solutions. This includes both digital and traditional paper documents. The company reported 37% year-on-year growth in data center bookings.
However, although we may live in an increasingly paperless world, paper documents aren’t completely going away. In fact, the threat of cyber threats makes it imperative that large enterprises maintain a paper copy of sensitive documents.
Paper document management and shredding isn’t a high-margin business. Nevertheless, according to Iron Mountain, over 70% of an organization’s business practices are managed on paper.
That should be enough to support the company's expected earnings growth of 6.9% in 2023. It should also support analysts’ expectations for earnings growth of approximately 10% over the next five years. And the company has a dividend with a yield of 4.52%.
About Iron Mountain
Iron Mountain Incorporated (NYSE: IRM) is a global leader in information management services. Founded in 1951 and trusted by more than 240,000 customers worldwide, Iron Mountain serves to protect and elevate the power of our customers' work. Through a range of offerings including digital transformation, data centers, secure records storage, information management, asset lifecycle management, secure destruction and art storage and logistics, Iron Mountain helps businesses bring light to their dark data, enabling customers to unlock value and intelligence from their stored digital and physical assets at speed and with security, while helping them meet their environmental goals.
- Current Price
- $116.30
- Consensus Rating
- Buy
- Ratings Breakdown
- 6 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $129.40 (11.3% Upside)
#5 - Public Storage (NYSE:PSA)
Document storage may not be a high-margin business, but storage of our physical stuff certainly is. That’s a compelling reason to own another boring stock, Public Storage (NYSE: PSA). The company does business as a real estate investment trust (REIT).
When you consider investing in a REIT, it’s important to understand what they invest in. In the case of public storage, they are focused on acquiring, developing, owning, and operating self-storage facilities in the U.S. and Europe. It is the fourth-largest REIT by market capitalization.
It could be logical to believe that this segment of the economy would slow down with a weak housing market. But that doesn’t appear to be the case. In fact, in its most recent conference call, Public Storage reported that move-in volumes were up almost 12%. And the company announced that volumes were up double-digits in the year's second half.
About Public Storage
Public Storage, a member of the S&P 500 and FT Global 500, is a REIT that primarily acquires, develops, owns, and operates self-storage facilities. At December 31, 2023, we had: (i) interests in 3,044 self-storage facilities located in 40 states with approximately 218 million net rentable square feet in the United States and (ii) a 35% common equity interest in Shurgard Self Storage Limited (Euronext Brussels: SHUR), which owned 275 self-storage facilities located in seven Western European nations with approximately 15 million net rentable square feet operated under the Shurgard brand.
Read More - Current Price
- $332.86
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $339.64 (2.0% Upside)
#6 - Concrete Pumping (NASDAQ:BBCP)
When it comes to boring stocks it doesn’t get much more pedestrian than watching paint, or in this case concrete, dry. But there’s a bullish story around Concrete Pumping Holdings, Inc. (NASDAQ: BBCP) that may not be reflected in the bullish sentiment.
Concrete Pumping delivers concrete pumping services to the commercial, infrastructure, and residential sectors. It also provides industrial cleanup and containment services to construction companies.
On January 24, 2023 Concrete Pumping delivered strong fourth-quarter 2022 results and, most importantly, issued solid guidance for the year ahead. But an item that came out in the conference call is worth noting.
Specifically, the company said it anticipated renewed investment in the United States via the Infrastructure Act. That investment, however, is not built into its 2023 forecast. In other words, there could be revenue and earnings in addition to their current forecast.
BBCP stock trades at 16x earnings. The company has a profit margin above its sector average, and analysts say the company will post average earnings per share (EPS) growth of approximately 14% in the next five years.
About Concrete Pumping
Concrete Pumping Holdings, Inc provides concrete pumping and waste management services in the United States and the United Kingdom. The company offers concrete pumping services to general contractors and concrete finishing companies in the commercial, infrastructure, and residential sectors under the Brundage-Bone and Capital Pumping brands; and industrial cleanup and containment services primarily to customers in the construction industry under the Eco-Pan brand.
Read More - Current Price
- $5.75
- Consensus Rating
- Hold
- Ratings Breakdown
- 2 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $7.31 (27.3% Upside)
#7 - Aris Water Solutions (NYSE:ARIS)
Another small-cap company worth looking at as a boring stock is Aris Water Solutions, Inc. (NYSE: ARIS). The company provides water handling and recycling solutions for oil and gas operators in the Permian Basin.
On February 28, 2023, Aris announced that Exxon Mobil Corporation (NYSE: XOM) joined the company’s existing strategic agreement with ConocoPhillips (NYSE: COP) and Chevron Corporation (NYSE: CVX) to find solutions for the beneficial reuse on produced water.
Specifically, the initiative will help the companies “develop cost-effective and scalable solutions of treating produced water for non-consumptive agricultural, alternative power generation and other industrial and commercial applications.”
The stock has a Moderate Buy rating from the analysts tracked by MarketBeat with a 44% upside from its current price. In the next five years, analysts expect the company to grow earnings per share (EPS) at an annual rate of over 68%.
ARIS stock has a P/E ratio of just over 10x earnings and has debt-to-equity ratio of just 0.59%.
About Aris Water Solutions
Aris Water Solutions, Inc, an environmental infrastructure and solutions company, provides water handling and recycling solutions. The company's produced water handling business gathers, transports, unless recycled, and handles produced water generated from oil and natural gas production. Its water solutions business develops and operates recycling facilities to treat, store, and recycle produced water.
Read More - Current Price
- $26.35
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 6 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $18.50 (29.8% Downside)
For passive investors, the thought of switching around your portfolio may be a bit unsettling. After all, many buy-and-hold investors believe in Warren Buffett who says the best length of time to hold a stock is forever.
That's good advice. And if your portfolio is delivering returns that are keeping you on track to reach your goals, then staying the course may be the right move.
But if you're looking to maximize your potential growth without taking on too much additional risk, it may be time to add some new names to your portfolio. These may get you the little bit of growth you need to keep your portfolio in the green until we get to the next bull market.
The stocks listed here are by no means an exhaustive list. And if you're a subscriber to MarketBeat All-Access you have access to a variety of free research tools such as our stock screeners. This lets you search for stocks based on the criteria that fit your portfolio the best.
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