Different investors have different needs, and many of my holdings are micro-caps that are relatively risky. While there are more than a few of you who don’t mind the odd micro-cap, most investors feel more comfortable in stocks that have relatively low risk of significant capital loss in the medium term (short-term investors, there’s little I can do for you, sorry.)
I won’t bore you with the intricacies of our arrangements but I exercise influence over a decent chunk of Mum’s money and I tend to put her in lower risk options. Here are four stocks I have picked for her:
Bentham IMF Limited (ASX: IMF) is Mum’s smallest company and even it is a relative big boy in my portfolio. The $322 million company is up 15% since I added it to my portfolio at $1.70, but I still think it is a decent option. At current prices the litigation funder trades on a trailing yield of 3.8%, but the dividend is susceptible to moving both up and down, so don’t rely on it. I like Bentham IMF because it profits from dishonesty and incompetence at high levels and believe you me both are going strong.
TPG Telecom Ltd (ASX: TPM) is a $4.7 billion telecommunications company that owns significant infrastructure assets, in particular fibre optic cables. At current prices it’s a bit too expensive to be a clear buy and it only yields a paltry 1.4%. However, management has demonstrated respect for shareholders over the long term and I personally prefer its model over the asset-light approach favoured by M2 Group Ltd (ASX: MTU). Those focussed on profits, growth and in particular return on equity will of course prefer the smaller M2, but if you are looking to get aboard the fibre optic express it is hard to ignore TPG.
I can’t claim any credit for picking Tassal Group Limited (ASX: TGR) though it was picked for me by two of my mentors – both at below $1.50. They are taking some profits now so I wouldn’t be buying, but the Tasmanian salmon farmer remains an excellent way to gain exposure to primary production of food. Tassal yields over 2.5% despite the fact that the share price has risen to $4.
Another one I can’t claim credit for is United Overseas Australia Limited (ASX: UOS) a Malaysian property developer that is actually expanding into Burma, I mean Myanmar. My contact in the country tells me that the place they are trying to develop is certainly crying out for it, but that there is still some risk because a lot of the power will be with the local partner. Nonetheless, the company has no debt and plenty of cash so it can afford to venture into new territory. The company yields over 4.5% and trades at under book value.
TPG Telecom and Tassal are probably too expensive these days, but this growing company is still a bargain.
Indeed, at least 2 directors have, within the last 6 months, purchased shares in this growing company at very close to the current share price. Better yet the CEO owns over 15%!
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Motley Fool contributor Claude Walker (@claudedwalker) owns shares in United Overseas Australia, Bentham IMF and has an indirect interest in both TPG Telecom and Tassal.