If you want to avoid the risk of losing your investment you should be looking for companies that are more likely to maintain and grow their value regardless of market conditions. To do this, you need to find the important traits present in these companies, which are namely a robust balance sheet, strong liquidity and a proven ability to earn money over time. Characteristics like this are present in Regions Financial, Convergys and Great Western Bancorp below.
Regions Financial Corporation (NYSE:RF)
Regions Financial Corporation, together with its subsidiaries, provides banking and bank-related services to individual and corporate customers in the United States. Started in 1971, and currently headed by CEO O. B. Hall, the company employs 20,666 people and has a market cap of USD $21.49B, putting it in the large-cap category.
The company’s capital structureis attractive as 90.61% of liabilities are in the form of deposits, which is a good alternative to many other riskier funds. To add to this, of the loans that they make, only 0.76% are considered as a write-off, providing greater comfort for investors that the company is well-grounded if equities become out of favour. Furthermore, at a US$21.49B market cap and a PE multiple of 16.97x, there is a liquid market for the stock which is relatively undervalued compared to the market, helping curtail the rate of decline in share price during periods of mass selling. Seeing that last year’s earnings growth continues the previous 5 years’ positive annual growth trajectory at 17.95% and 14.96% respectively, RF is a strong candidate for a bear market based on these defensive tenets. Continue research on Regions Financial here.
Convergys Corporation (NYSE:CVG)
Convergys Corporation provides customer management services to communications and media, technology, financial services, retail, healthcare, government, travel and hospitality, and other vertical markets worldwide. Established in 1998, and run by CEO Andrea Ayers, the company now has 110,000 employees and with the company’s market cap sitting at USD $2.17B, it falls under the mid-cap category.
CVG’s financial management makes the company a solid defensive candidate , due to high liquidity with current assets covering liabilities by 1.31x. This debt is also well-supported by cash flows generated from day-to-day operations, reaching 86.62% of borrowed funds, which makes investor capital robust against adverse market conditions. Furthermore, at a US$2.17B market cap , more buyers and sellers exist for the stock than there would be if it were smaller, helping curtail the rate of decline in share price during periods of mass selling. Seeing that the last 5 years show an annual increase of 5.07% in the bottom line, CVG holds many of the keys to avoiding the potentially destructive forces of a bear market. Dig deeper into Convergys here.
Great Western Bancorp, Inc. (NYSE:GWB)
Great Western Bancorp, Inc. operates as the bank holding company for Great Western Bank that provides business and agribusiness banking, retail banking, and wealth management services. Established in 1935, and currently lead by Kenneth Karels, the company employs 1,615 people and with the market cap of USD $2.55B, it falls under the mid-cap stocks category.
GWB’s financial management makes the company a solid defensive candidate because its liabilities are predominantly made up of low-risk deposits (92.00%). Additionally, of the lending they do engage in, only 1.4% fail to deliver on their initially expected yield, which makes investor capital robust against adverse market conditions. because it’s a mid-cap stock priced at US$2.55B and a PE of 17.86x, greater liquidity is offered at a good price relative to the market, enabling the stock to better withstand selling pressure during market downturns. The past 5 years show the company has grown earnings by 10.02% annually and recorded a return-on-assets over the previous twelve months that exceeded the industry average, showing GWB has maintained attractive fundamentals for a defensive portfolio. More detail on Great Western Bancorp here.
For more robust companies to add to your portfolio, explore this interactive list of defensive stocks.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.