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 successfully, there are certain fundamentals that you should look for, which include but are not limited to: financial health, liquidity and reliable earnings capacity. Characteristics like this are present in Great Western Bancorp, Industrias Bachoco. de and Children’s Place below.
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. Formed in 1935, and currently lead by Kenneth Karels, the company employs 1,615 people and with the stock’s market cap sitting at USD $2.60B, it comes under the mid-cap category.
GWB has a robust financial position because its liabilities are predominantly made up of low-risk deposits (89.89%). On top of this, the amount of loans that default sits at an insignificant 1.6% of total loan assets, making an investment in the company a safer bet if the cycle turns against you. With Great Western Bancorp’s market value of US$2.60B , the company benefits from greater liquidity and trading volumes than similar companies of smaller size, helping curtail the rate of decline in share price during periods of mass selling. To add to this, GWB has recorded a healthy 10.16% annual growth in earnings over the past 5 years and a relatively strong ROA in the past year (that beat the industry), which shows GWB contains many of the valuable traits in a defensive stock. Continue research on Great Western Bancorp here.
Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA)
Industrias Bachoco, S.A.B. de C.V., through its subsidiaries, operates as a poultry producer in Mexico and the United States. Started in 1952, and headed by CEO Rodolfo Ramos Arvizu, the company provides employment to 25,000 people and with the stock’s market cap sitting at USD $3.07B, it comes under the mid-cap stocks category.
IBA has a robust financial position , with long-term commitments covered by cash and short-term assets at a ratio of 5.15x. On top of this, cash flow from operations is 30% of total debt, a strong sign, meaning if economic conditions dampen the company’s ability to grow earnings, IBA should still be able to service debt. Moreover, as its price gives it a US$3.07B value on the market and a PE multiple of 11.89x, 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. As earnings have annually compounded at 16.57% over the past 5 years and last year’s growth was 22.70%, the company has some of the necessary characteristics to maintain value during a cyclical downfall in the market. Interested in Industrias Bachoco. de? Find out more here.
The Children’s Place, Inc. (NASDAQ:PLCE)
The Children’s Place, Inc. operates as a children’s specialty apparel retailer. Established in 1969, and currently lead by Jane Elfers, the company now has 9,600 employees and with the company’s market cap sitting at USD $2.40B, it falls under the mid-cap group.
PLCE’s financial management makes the company a solid defensive candidate , with long-term commitments covered by cash and short-term assets at a ratio of 9.37x. On top of this, cash flow from operations is well-above total debt by 2x, a strong sign, giving equity investors greater confidence in the safety of their investment. Furthermore, at a US$2.40B market cap , the company benefits from greater liquidity and trading volumes than similar companies of smaller size, helping curtail the rate of decline in share price during periods of mass selling. As last year’s 50.54% earnings growth beat the 5-year annual average of 6.71% resulting in a solid 25.23% ROE, PLCE has maintained attractive fundamentals for a defensive portfolio. More on Children’s Place here.
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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.