What springs to your mind when someone talks about ‘defensive’ stocks? Is it the healthcare sector? Healthcare companies do have many attractive characteristics – but many of them carry a lot of debt and are vulnerable to changes in regulation.
Here are highly defensive – albeit boring – businesses that investors can probably count on, year-in and year-out.
Servcorp Limited(ASX: SRV)
Servcorp operates around 5,400 serviced offices across 53 cities in 22 countries worldwide. Servcorp’s business is geographically diversified, with 32% of its ‘floors’ (on which the offices are located) in the ANZ + South-East Asia region, 24% in North-East Asia, 28% in Europe, Middle-East, and Africa, 15% in the USA, and a gentlemanly 0.1% in India.
Despite an impressive footprint, the company carries no debt and focuses on expanding organically – which is partly why its dividend is so small. Occupancy regularly sits around 75%, leaving room for upside, and as companies increasingly lighten their capital intensiveness, demand for serviced offices should increase. Although shares have risen strongly in recent times, Servcorp remains priced at around 20 times earnings, while its diversification provides an important buffer against a downturn in any given region.
SRV Price at posting:
$7.98 Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)