It's not unusual or uncommon to see a company with a small market capitalisation sink by 50% or more – it's a risk which comes with the territory. Likewise, small stocks are much more likely to zip 50% higher too.
The fact that smaller companies have a higher risk of wiping out, is a major reason many investors remain firmly invested in the largest, strongest companies listed on the ASX. It's a sensible strategy for conservative portfolios, particularly – as is often the case for self-funded retirees – if you are reliant on income from your portfolio to cover living costs.
Here are four stocks which are all amongst the 100 leading industrial stocks on the ASX that in my opinion could be reasonable additions to a defensive, long-term portfolio.
- Coca-Cola Amatil Ltd (ASX: CCL) – Now is arguably an exciting opportunity to buy this leading beverage company with the stock still trading well off of its one year and five-year highs. While there are headwinds for the group many of these are possibly now well-and-truly reflected in the share price.
- Lend Lease Group (ASX: LLC) – Shares in this property and infrastructure company have fallen out of favour, with the stock recently hitting a fresh 52-week low. Given the group's pipeline of global opportunities, Lend Lease's long term growth profile continues to look appealing.
- ResMed Inc. (CHESS) (ASX: RMD) – Boasting solid growth prospects within the respiratory health device sector and a share price around 20% off of its 52-week high, an entry at current levels could turn out to be a long-term winning move.
- Wesfarmers Ltd (ASX: WES) – As one of the leading blue-chip stocks on the ASX, Wesfarmers is either already in many portfolios or a candidate for investment. The share price has gone nowhere in the last year yet the company has made a number of strategic moves – namely asset sales – which have positioned Wesfarmers with a rock solid balance sheet to utilise when acquisition opportunities arise.
