MENU

3 defensive shares to sleep easy at night

People think of shares as a risky. Shares certainly are riskier than cash in the short-term. But, ‘shares’ is such a vague, wide term.

Different shares offer different risk factors. Clearly GetSwift Ltd (ASX: GSW) has a different risk weighting compared to REA Group Limited (ASX: REA).

To be able to comfortably sleep at night some investors might want their portfolios to be full of shares that may be relatively safer in bad times or good times. Those types of businesses are ones that provide essential services that households really wouldn’t want to go without.

Here are three shares that may be able to let you sleep soundly at night:

TPG Telecom Ltd (ASX: TPM)

TPG is one of the country’s largest telecommunications businesses. It runs the value brand TPG as well as iiNet. The business generates a pleasing source of cashflow with households paying their monthly fee for internet services.

In the future TPG may become a bigger business as it launches its own mobile offering in Australia and Singapore. When 5G comes along that could be another boost to future earnings.

It’s currently trading at 18x FY19’s estimated earnings.

InvoCare Limited (ASX: IVC)

InvoCare is the largest funeral service provider is Australia. Sadly there are only two things certain in life, as the saying goes, and one of those is death. This means InvoCare gets an almost-guaranteed source of earnings each year because it has a market share of around a third.

I believe that, even in a recession, families will continue to pay for a quality funeral for their loved one. InvoCare is currently investing in revamping its locations so that it can cater for people’s changing preferences for a funeral.

It’s currently trading at 23x FY19’s estimated earnings.

Woolworths Group Ltd (ASX: WOW)

There are few businesses with more defensive earnings than a supermarket. Households need to keep eating, even if the country is in a recession. Woolworths is actually winning the battle against Wesfarmers Ltd’s (ASX: WES) Coles at the moment, Woolworths’ sales are growing at a much faster pace.

Woolworths is currently trading at 21x FY19’s estimated earnings.

Foolish takeaway

All three shares may offer investors less volatility in earnings over the next couple of years compared to the overall index, but I can’t see Woolworths creating much earnings per share (EPS) growth due to competition from the likes of Aldi. TPG could do well, but the telco sector is under pressure at the moment.

If I could only choose one share it would definitely be InvoCare due to the ageing demographics and the significant investing in refurbishments that it’s currently making.

If you don’t want defensive ideas and you just want find the best growth, then you’re looking top growth shares like these ones.

4 Stocks for Building Wealth After 50

Renowned investor Scott Phillips just released a brand-new report detailing his 4 favorite stocks to buy right now.

And I don’t know about you, but I always pay attention when some of the best investors in the world give me a stock tip.

This is your chance to get in at the very beginning of what could prove to be very special investments.

Click here to get started today!

Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited. The Motley Fool Australia owns shares of and has recommended TPG Telecom Limited and Wesfarmers Limited. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.