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Sleep-tight stocks tend to be established firms with a competitive advantage in slow-growth industries


Six Boring Stocks
with Potentially Exciting Rewards

The sexiest, most popular stocks have a speculative allure that’s hard to deny. Names like GameStop, Tesla and Virgin Galactic get the paparazzi treatment from the media, grab the attention of day traders and often top the list of Wall Street’s big daily gainers – and losers, notes Adam Shell, Kiplinger's Personal Finance.

But such high-profile stocks tend to have pricey valuations and short or inconsistent track records. Wild price swings can make it hard to stay invested if you can’t deal with nail-biting volatility.

Instead, consider lower-profile and less-volatile stocks.

“Boring is beautiful,” says Jim Tierney, chief investment officer of concentrated U.S. growth at fund company AllianceBernstein.

Sleep-tight stocks tend to be established firms with a competitive advantage in slow-growth industries. They generate predictable sales and profit growth, no matter whether the economy is booming or contracting. They tend to be financially stable, with strong balance sheets, which reduces the odds that they’ll get into financial trouble and allows them to pay dividends.

Here are six low-profile stocks with potentially high rewards.

Costco Wholesale’s (COST) recurring revenues, thanks to its membership model, allow it to generate a steady stream of sales and profits in all economic environments. Nine out of 10 members renew each year. The stock is a steady performer, outperforming the S&P 500 Index in the past two-, three-, five-and 10-year periods.

Medical device maker Medtronic’s (MDT) broad product mix, continued investment in new devices, 49,000-plus patents and long list of hospital clients is a prescription for steady growth and a diversified revenue stream, says Mike Liss, senior portfolio manager at American Century Investments.

PepsiCo’s (PEP) iconic brands – 11 of the 15 top-selling products in convenience stores come from the company - and consistent sales of soft drinks and salty snacks, provides a protective moat around its business. PepsiCo generated $70 billion in sales last year. In June, it hiked its dividend by 5%, the 49th straight year of payout increases.

Pfizer’s (PFE) COVID-19 vaccine and other drugs have strong demand in both healthy and ailing economies, which has helped the pharmaceutical giant deliver strong second-quarter results and caused it to boost its annual 2021 sales forecast by 10%. Overall, management expects at least 6% compound annual sales growth through 2025.

Republic Services (RSG), the second-biggest waste hauler in North America, should improve as the economy reopens, and a strong second-quarter bodes well for the future. Revenues increased nearly 15% compared with the same quarter a year ago, and free cash flow came in at $545 million, more than the $302 million forecast.

Zoetis (ZTS) is a leading animal health company that makes medicines for pets and livestock. Demand for veterinary care is on the rise and more pet owners are spending on Zoetis meds. The company is on track for a 17% profit jump this year and 13% next year, according to Tierney.

Editor’s Note: Adam Shell is associate editor for Kiplinger’s Personal Finance magazine, www.Kiplinger.com.

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