Although retail investors may be tempted to pick up last year’s hottest trends that seemingly trade now at discount prices, they may be better off considering boring stocks to buy. Fundamentally, we just don’t know what may lie ahead. With geopolitical flashpoints and ongoing pandemic recovery efforts, a conservative approach to the equities space may yield surprising gains.
Further, investors must also recognize harsh realities. Recently, the major indices have not performed well, stemming from the latest read of the Personal Consumption Expenditures (PCE) index. With inflation coming in hotter than expected, the Federal Reserve may raise benchmark interest rates to combat stubbornly high prices. If so, you don’t want exclusive exposure to risk-on names. Rather, these boring stocks to buy may see you through some rough waters.
| DE | Deere | $422.32 |
| SRE | Sempra Energy | $147.43 |
| DG | Dollar General | $214.86 |
| CAG | Conagra | $35.79 |
| PSA | Public Storage | $296.76 |
| KR | Kroger | $44.99 |
| PFGC | Performance Food Group | $57.60 |
Deere (DE)
Since the dawn of the computer age, agricultural equipment manufacturer Deere (NYSE:DE) must have realized that eventually, the jig would be up. Nowadays, the word agriculture doesn’t even enter most folks’ minds when it comes to job opportunities. However, that’s what makes DE a perfect candidate for boring stocks to buy. Underneath the surface, it’s actually quite the innovator.
Understandably, investor interest nowadays centers on artificial intelligence and machine learning: AI this, ML that. Got it. However, Deere put this technology to the test with its automated smart tractors. Not only should this innovation improve productivity, it also indirectly addresses the other point: few people in the modern age want to work in agriculture.
Another benefit to being one of the boring stocks to buy is a tendency toward fiscal resilience. Against the trailing year, Deere’s operational stats make competitors envious. It features a three-year revenue growth rate of 11.7% and a net margin of 14.9%, both stats above sector averages. Finally, Wall Street analysts peg DE as a consensus moderate buy. Further, their average price target stands at $473.53, implying nearly 13% upside potential.
Sempra Energy (SRE)
As a utility giant, Sempra Energy (NYSE:SRE) symbolizes a natural choice for boring stocks to buy. However, it also might be one of the most despised. Because it’s a utility, it enjoys a natural monopoly. Now, shareholders like natural monopolies since it means few enterprises can legitimately compete with the underlying entity. However, the customers obviously feel differently.
Nevertheless, SRE should make for an intriguing investment despite any objections. On balance, Sempra’s dominance of the Southern California region makes it a true power player. Yes, many people may be leaving the Golden State. Still, it represents the biggest economic engine of the U.S. so Sempra’s relevance is largely assured. If you have lingering doubts, note that Sempra carries a forward yield of 3.09%. While it’s a bit lower than the utility sector’s average yield of 3.7%, the payout ratio sits at 47.73%. Therefore, the yield should be sustainable.
Turning to Wall Street, analysts peg SRE as a consensus moderate buy. Also, their average price target stands at $170.56, implying over 15% upside potential.
Dollar General (DG)
It might be an obvious play for boring stocks to buy. However, that doesn’t mean Dollar General (NYSE:DG) loses its potential for viability. As stated earlier, inflation remains stubbornly high. Naturally, elevated prices will challenge middle-income households. From an immediacy angle, then, DG deserves to be on your radar.
Looking further down the line, it’s very possible that the Fed may hike the benchmark interest rate. In turn, this dynamic may slow economic activity due to rising borrowing costs. While this might address inflation, it could create another problem: more mass layoffs. For Dollar General, the net result ends up the same: more relevancy, more demand.
According to Gurufocus.com’s analysis of Dollar General’s discounted cash flow (DCF), DG stock’s fair value stands at $273.35. Compared to the time-of-writing price of $213.79, that’s quite a bargain. Looking to the Street, analysts peg DG as a consensus moderate buy. Their average price target stands at $248.50, implying over 16% upside potential.
Conagra Brands (CAG)
Headquartered in Chicago, Illinois, Conagra Brands (NYSE:CAG) is a packaged goods firm. Specifically, it makes and sells products under various brand names available in supermarkets, restaurants, and food service establishments. Although seemingly relevant, CAG stock gave up 8% of equity value since the start of the year.
Still, this might be a temporary decline. In the trailing year, CAG gained over 3%. More importantly, global food supply chain concerns may crimp the inventory of critical commodities. In turn, demand (prices) may rise significantly, which may cynically lift CAG.
To be fair, Conagra’s financials themselves don’t seem particularly remarkable but they’re not terrible either. For bullish investors, they’ll want to consider CAG’s valuation proposal. Currently, the market prices shares at a forward multiple of 12.54. As a discount to earnings, Conagra ranks better than 65.78% of the competition.
Lastly, Wall Street analysts peg CAG as a consensus moderate buy. Their average price target stands at $41.60, implying over 16% upside potential. Thus, it’s worth considering as one of the top boring stocks to buy.
Public Storage (PSA)
Unless you’re a big fan of the TV show “Storage Wars,” Public Storage (NYSE:PSA) might come off as one of the very boring stocks to buy. However, it could turn out to be surprisingly relevant. For instance, with many people priced out of owning real estate, they may need storage in a bid to rent smaller residential units to save money.
Even more distressing, some people might need to downsize their homes out of force. For such a situation, Public Storage can help mitigate challenges. To be sure, PSA presents a decent performer so far this year, gaining nearly 8% of equity value.
Notably, Public Storage’s price-earnings-growth (PEG) ratio sits at 0.72 times. In contrast, the sector median PEG is 2.04 times. Moreover, the enterprise enjoys strong operational stats. For example, its three-year revenue growth rate of 13.2% outpaces over 86% of the competition. Finally, Wall Street analysts peg PSA as a consensus moderate buy. Further, their average price target stands at $348, implying nearly 18% upside potential. Thus, it makes for a solid case for boring stocks to buy.
Kroger (KR)
In many ways, the case for Kroger (NYSE:KR) as one of the boring stocks to buy sells itself. You only need to go back a few years. During the initial onset of the coronavirus pandemic, Kroger and similar grocery store outlets became the place for essentials (after scouring hardware stores for N95 masks). Now, economic downturns don’t promote such intensity of emotions. But the demand should still be there.
Put another way, Kroger benefits from the trade-down effect. With consumers feeling the pressure, they’ll need to trade down their expectations. Gone will be eating out at restaurants. In its place will stand cooking meals at home. That should boost KR stock. Another factor benefitting Kroger is its value proposition. Presently, the market prices KR at a forward multiple of 10.31. As a discount to earnings, the company ranks better than 84.75% of the competition. Lastly, covering analysts peg KR as a consensus moderate buy. Their average price target stands at $51.86, implying nearly 20% upside potential.
Performance Food Group (PFGC)
A food enterprise that has its roots in the late 19th century, Performance Food Group (NYSE:PFGC) distributes a range of food products. It has three divisions, each catering to specific market segments. Conspicuously, it’s truly one of the boring stocks to buy. Since the January opener, PFGC gained less than 1%. In the trailing year, it’s down less than half a percent.
According to Gurufocus.com, PFGC represents a fairly valued investment. To be blunt, on an objective basis, it appears a bit overvalued. Nevertheless, it offers strong growth metrics. For instance, its three-year revenue growth rate stands at 21.5%, beating out over 93% of its rivals. Its book growth rate during the same period pings at 19.8%, above 88% of the industry.
However, it’s the analyst view that has people talking. Currently, PFGC features a strong buy consensus view. Indeed, out of 12 analysts, only one has a hold assessment, meaning it was close to a unanimous strong buy. Further, the experts’ average price target stands at $73.36, implying over 28% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.