Two stocks that fared well in 2019 are Anglo-Eastern Plantations (LSE:AEP) and Strix Group (LSE:KETL), which both make products that are in high demand.
AEP produces crude palm oil and rubber at 15 plantations in Indonesia and Malaysia, while Strix makes kettle components. Both companies feature on the FTSE All-Share financial index of the London Stock Exchange.
The AEP share price is down 1.5% year to date, but has gained over 28% in the past six months. It has earnings per share of 22p and a 0.5% dividend yield.
Unethical investing
You should be aware that AEP could be considered as damaging to the environment as traditional oil and gas company stocks. Palm oil is the world’s most popular vegetable oil, second only to soya in world production, but its production has caused destruction of the world’s most biodiverse forests through deforestation. This has resulted in a loss of wildlife, including already endangered species.
However, its popularity and multiple uses have seen it weave its way into so many everyday products, you’d be hard pushed to avoid it. It’s cheap to produce, stable in processing, slow to smoke, and has a long shelf life. For these reasons, it’s found in food, margarine, soaps, biodiesel, detergents, cosmetics, ice cream, and animal feed.
Ethical investing aside, this is an established business with over 27 years’ experience in the industry and a £221m market cap. However, it’s up against several external challenges, including political and climate, and with a price-to-earnings ratio (P/E) of 25 I think it’s probably now overvalued.
Anyone for a cup of tea?
The Strix Group product statistics are mind-boggling. Its company management estimates consumers use its safety controls over a billion times per day. With a 38% global share of the market, it’s the world’s number one manufacturer of kettle controls.
Strix share price is up 16% in the past year, but down 5.7% year to date. It has a P/E of 16.9, earnings per share are 11p and forward dividend yield is 4%. It has a market cap of £350m, which makes it a more stable AIM stock than many. It also employs over 800 people.
The coronavirus outbreak could directly affect Strix as its manufacturing operations are located in China. The company released a statement this week saying its production experienced a one-week delay, but two-thirds of the workforce have now resumed work. The other side of the coin is that Strix has witnessed a few customers increase order sizes because of disruption somewhere else in their supply chain.
To date, the Strix Group shows minimal impact from the outbreak, but as the future impact of coronavirus remains relatively unpredictable, it would be a factor to remember if you’re considering investing.
Outlook ahead
These companies both produce products that experience high demand globally, that I don’t think this is likely to change anytime soon. However, they each face risks in their manufacturing chain, particularly from external influences and a global economic slowdown.
If you don’t mind a bit of risk in your portfolio, I think these might make a good choice if buying during a declining market. Of the two, I prefer Strix.
2020 has seen a turbulent start to the markets as a result of both Brexit uncertainty and global political ongoings. I imagine this may well continue throughout the year as the true impact of coronavirus comes to light.
