There's so much excitement in the air for investors right now.
Interest rates remain low. Business and consumer confidence are both gradually improving. The S&P/ASX 200 (INDEXASX: XJO) is riding higher and higher while overseas the United States S&P 500 index is fluctuating around all-time highs.
While all of that is excellent news for most investors, others are growing increasingly concerned that it could all be too good to be true.
The fact is, the stock market is well overdue for a correction. In addition, Australia's mining sector continues to suffer as iron ore prices plummet, while there are rising tensions surrounding the geopolitical situations being played out in Europe as well as Iraq and Syria.
Who knows – this time next week the Aussie market could be sitting at just 5,000 points, down from today's 5,662 level. I'm by no means suggesting that will happen, but it's always a possibility.
As such, it is imperative that investors do not lose sight of the importance of maintaining a strong foundation for their portfolios, made up of defensive, well-established companies capable of withstanding even the toughest economic conditions. Below, you'll find four companies which I believe would be well suited for any portfolio today.
- I'm going to start the ball rolling with Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). There are a number of comparisons which could be drawn between the Australian conglomerate and Warren Buffett's Berkshire Hathaway empire. Not only are they both run by world-class management teams, but they also diversify their investments across various industries to spread their level of risk. Soul Patts is predominantly exposed to Australia's telecommunications and construction industries, as well as coal mining.
- Veda Group Ltd (ASX: VED) would make for another excellent purchase. It boasts excellent growth prospects over the coming years (particularly with the introduction of Comprehensive Credit Reporting). Demand for Veda's products can also tend to rise in times of economic turmoil. Companies become increasingly wary of who they are extending credit to which results in a higher demand for credit checks. This was made evident when Veda managed to grow annual revenue strongly even through the GFC.
- Although small-cap stocks can tend to be more volatile in times of economic crises, Cash Converters International Ltd (ASX: CCV) could actually defy this trend. Cash Converters derives most of its earnings from its financial services division, which includes short-term financing arrangements. When the going gets tough, it's not uncommon for individuals to seek short-term loans or pawn their assets for a little extra cash – both of which benefit Cashies.
- Crown Resorts Ltd (ASX: CWN) is another good option for investors wanting to bolster their portfolio. Roughly three quarters of Crown's Australian revenue is derived from gaming, which is relatively immune to economic turbulence (most of us have tried our luck on the tables at some point or another – responsibly, of course). Crown is one of Australia's largest companies and boasts strong growth prospects both in Australia and abroad.
An ASX growth stock for ANY market conditions
Investors have been lucky enough to experience a bull market in recent years with many reaping massive returns. But the investors not left red-faced when the market turns sour will be those who are well prepared.