3 resilient actions to help solidify your portfolio


Some investors who buy and hold check their stocks every day, even though they know they have no plans to exit no matter what. Other investors have no interest in the daily registration. They’ve picked stocks that are genuinely meant to be long-term holdings and faithfully let time get the job done.

If you find yourself more like the former but would like to be more like the latter, trading some of your stocks for safer holdings may help. Here’s a look at three reliable and resilient choices that don’t require constant monitoring.

Image source: Getty Images.

1. Infosys Limited

Infosys Limited (NYSE: INFY) is one of those companies that most people have heard of, but few actually understand. Put simply, the India-based company is a technology consultant, helping all kinds of businesses step deeper into the digital age. For example, the company just facilitated an upgrade to a resource planning computer system for a water utility in Florida. It also performs subcontracted technical work when an organization simply wants to transfer these ongoing tasks to a third party.

It’s not a particularly fascinating industry, but it does have incredible traction. Not once in the past 20 years has Infosys’ revenue fallen year over year, and only once – in 2013 – has its operating profit fallen by a year over year. And keep in mind that this 20-year period includes the impact of the COVID-19 pandemic as well as the economic fallout from the subprime mortgage collapse of 2007-09. It’s impressive.

Analysts are also looking for more growth in the future, up and down. After accelerating this year after the headwind of 2020, the analyst community is calling for 11% sales growth next year to generate an identical 11% increase in earnings per share. This is a rate of growth that is generally not seen for an organization that is apparently not influenced by any environmental factor.

2. McDonald’s

You know the company, like everyone else on the planet. Indeed, the fast food chain Mcdonalds (NYSE: MCD) has one of the most recognizable brands (and logos) in the world. Except that this company is not quite what it seems at a glance. Rather than a fast food chain, McDonald’s is often described as a real estate company. All of its tenants happen to be fast food franchise operators.

Nor is it an unfair assessment. Of the 39,676 McDonald’s restaurants operational at the end of the last quarter, only 2,690 of them were actually owned by the company. The remaining 36,986 are operated by franchisees. These franchisees of course pay regular royalties and royalties to the parent company. But above all, under the franchise contract, these operators must lease their land and their building to the parent company. Like any other rent payment, these are due regardless of a location’s profitability and are instead based on a percentage of monthly sales.

This is not the norm in the fast food world. In most cases, an operator owns the property in question or has obtained it from a third party – with no clear potential conflict of interest involved when McDonald’s is the one and only option of an operator. franchisee as owner. These franchisees, however, find the strict rules worth it. The brand is still one of the most profitable franchise options in the fast food industry, which means that the income and revenue of the parent company is very reliable.

3. General dynamics

Finally, add General dynamics (NYSE: GD) to your list of resilient stocks that can help stabilize a fragile portfolio.

This is the kind of choice that is not always comfortable to have. Not only is the aerospace industry at least a little cyclical, the defense industry seems forever vulnerable to changes in the direction of political winds.

The point is, fear goes beyond a key aspect of General Dynamics’ business. That is, a large part of its income comes from maintenance contracts and the supply of goods that are regularly consumed by military and aeronautical customers. Of the last quarter’s $ 9.5 billion revenue, as a guide, $ 4 billion was generated by providing services rather than selling products. Equally compelling is the fact that at the end of the last quarter, General Dynamics had an order book of $ 88 billion, most of which is already funded. This is future revenue that is already planned, but cannot be reserved until the product or service is actually delivered.

General Dynamics is not as consistent in terms of revenue and profit as Infosys or McDonald’s. The company that makes everything from combat management platforms to Abrams tanks to nuclear submarines, experienced turbulence between 2011 and 2019, often in response to spending cuts and sometimes as a result of ‘a reconfiguration of the company.

Think of the bigger picture, however, and the longer term. The need for military equipment will never go away, although spending for some military equipment may fluctuate from year to year.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

About Walter Bartholomew

Check Also

Burger King puts a trendy (and fancy) ingredient on its new sandwich

American fast food customers say they want healthy food, but when it comes to McDonald’s …