It’s not unusual or uncommon to see a small capitalisation stock 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 factor in why many investors remain firmly invested in the strongest companies listed on the ASX and don’t stray into the small-cap sector. It’s a sensible strategy for conservative portfolios, particularly (as is often the case for self-funded retirees) if you are completely reliant on the income from that portfolio to cover your living costs.
For investors looking for solid large-cap stocks, which are leaders in their respective industries, here are five 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 which is currently trading at levels not seen in the past five years.
Lend Lease Group (ASX: LLC) – While many stocks have been hitting new 52-week lows recently, property and infrastructure company Lend Lease has been hitting new 52-week highs. Given the group’s pipeline of opportunities and leading global status the group appears well positioned to continue to grow in the future.
Orica Ltd (ASX: ORI) – This might seem an odd choice given the firm’s exposure to the depressed global mining sector, however, it does remain a market leader and its products will still be required for mining operations. With the share price down nearly 20% for the calendar year, Orica could even find itself as a takeover target.
ResMed Inc. (CHESS) (ASX: RMD) – Boasting solid growth prospects within the respiratory health device sector and a share price that is flat over the past 12 months, an entry point at current levels to this high growth stock looks increasingly appealing.
Wesfarmers Ltd (ASX: WES) – As one of the leading blue-chip stocks on the ASX, Wesfarmers is probably already in many portfolios. Like ResMed, the share price has gone nowhere in the last year yet the company has made a number of clever moves – such as asset sales – which has the group positioned to strike should an acquisition opportunity arise.
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.