National Grid
Suffice to say, National Grid (LSE: NG) is never going to be a particularly strong growth stock. For example, over the next two years it is forecast to grow its bottom line by just 4% and 2% respectively. As such, investor sentiment may not improve dramatically as a result of FTSE 100-beating profitability improvements.
However, where National Grid does hold huge appeal is in regard to its below-average levels of volatility. A key reason for this is its low beta, with National Grid currently having a beta of just 0.87, which indicates that its shares should fall by just 0.87% for every 1% drop in the wider index. And, with the EU referendum only months away, investor sentiment in the FTSE 100 could decline and make National Grid a stock that is well-worth holding.
Standard Chartered
On the opposite end of the scale to National Grid is Standard Chartered (LSE: STAN). Certainly, it is also a high-quality company, but it’s in the midst of a highly uncertain period, with a change in management and a shift in strategy likely to cause investor sentiment to come under pressure.
However, where Standard Chartered holds great appeal is in its exposure to the fastest-growing region for banking in the world: Asia. True, this has held its performance back in recent years, as Chinese growth has slowed somewhat and fears regarding a soft landing have come to the fore. But while China is likely to experience a slowdown in growth from its current rate of 7.4% per annum, falling interest rates should increase demand for loans and boost the region’s economy. This could provide an uptick to Standard Chartered’s profitability and share price.
Land Securities
Although Land Securities (LSE: LAND) is not one of the most exciting companies in the FTSE 100, its performance in recent years has been very strong. For example, its share price has risen by 109% in the last five years, as the UK’s improving economic performance has pushed investor sentiment higher. This has led to Land Securities trading on a price to earnings (P/E) ratio of 29.4.
This may seem to be extremely high – especially when the FTSE 100 has a P/E ratio of 16. However, the outlook for Land Securities is hugely positive: consumer confidence is on the up and the UK retail space is an excellent place to be investing. And, with inflation set to remain below 2% for the rest of the year according to the Bank of England, and wage rises set to beat it, stocks such as Land Securities could continue to post superb share price growth.
United Utilities
Although United Utilities (LSE: UU) may be viewed as a rather dull company, with the provision of water services not being among the most exciting of businesses, it offer huge long-term potential. A key reason for this is its defensive nature. Like National Grid, it has a very reliable business model that provides stability during what could prove to be an uncertain period for the FTSE 100, which could improve investor sentiment and send its shares higher.
And, with interest rates in the US and UK unlikely to rise at anything faster than a snail’s pace over the next few years, it is highly unlikely that highly indebted companies such as United Utilities will be hurt by increased debt servicing charges. As such, now seems to be a good time to add it to your portfolio.
Taylor Wimpey
The Conservatives’ focus on demand-side policies when it comes to the housing market is good news for Taylor Wimpey (LSE: TW). That’s because it ensures that there isn’t an influx of supply that could harm the company’s margins, and it also means that there should be sufficient demand for the company’s pipeline of new properties.
Looking ahead, Taylor Wimpey’s earnings growth rate is in excess of that of the FTSE 100. For example, it is expected to increase its bottom line by 30% this year and by a further 14% next year. This compares favourably to the mid-to-high single-digit growth rate that is pencilled in for the FTSE 100, which means that investor sentiment in Taylor Wimpey could improve dramatically.
