3 Stocks To Overcome The FTSE 100’s Current Turbulence: National Grid plc, Centrica PLC And Diageo plc

National Grid plc (LON:NG), Centrica PLC (LON:CNA) & Diageo plc (LON:DGE) could stabilise your portfolio against the FTSE 100 (INDEXFTSE:UKX)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

FTSE100

The last month has been an extremely turbulent time for the FTSE 100, with the UK’s leading index losing 5% of its value during the period. Reasons for the fall include major uncertainty surrounding the ending of the US Federal Reserve’s monthly asset repurchase programme, continued woes in the Eurozone and further uncertainty in Eastern Europe and the Middle East.

So, with none of those issues looking likely to disappear in the short term, now could be a good time to stabilise your portfolio. With that in mind, here are three stocks that could fit the bill.

Diageo

Although shares in Diageo (LSE: DGE) have posted disappointing returns during 2014 (they are currently down 13%), their beta of 0.8 could provide stability moving forward. Indeed, a beta of 0.8 means that shares in Diageo should move by 0.8% for every 1% move in the wider index, thereby producing a less volatile experience.

Furthermore, with the sale of alcohol usually holding up well even during the darkest economic and political periods, Diageo could prove to be a consistent defensive play. With shares in the company trading on a price to earnings (P/E) ratio of 17.5, they look good value by historical standards and could move higher.

National Grid

Over the last month, shares in National Grid (LSE: NG) have fallen by less than 3%, which highlights the defensive merits of the company. Indeed, National Grid has a beta of just 0.6 and, with a highly consistent and visible earnings profile, could prove to be a sound defensive play.

In addition, National Grid is aiming to increase dividends per share in-line with inflation, which should prove a hedge against higher rates of inflation in future. With shares in the company currently yielding 4.9%, they offer strong income prospects now, as well as in future years.

Centrica

With a beta of 0.4 and a yield of 5.7%, Centrica (LSE: CNA) looks like the ideal defensive stock. Certainly, it’s a company worth owning during turbulent periods in the FTSE 100. However, with one third of its business being in exploration, it has perhaps more growth potential than many of its rival domestic energy suppliers and other utilities.

For example, Centrica is due to increase earnings by 12% next year and, with political risk from a change in government being priced in, this means that Centrica trades on a price to earnings growth (PEG) ratio of just 1.1. This indicates growth at a reasonable price to go alongside the stock’s impressive defensive merits.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of Centrica and National Grid. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »