SAFE STOCKS WITH BARGAIN PRICES
The stock market was on a tear for most of 2016 with sharp increases in the prices of many stocks being the result. As such, it is significantly harder to find safe stocks with bargain prices than it was just a year ago though opportunities for bargains surely still exist in the market. This article will discuss several safe stocks that are still offered with bargain prices and can be accumulated by individuals at attractive prices.
While many stocks increased significantly in 2016 certain industries were left behind. One industry that did not accelerate at the same pace as other stocks was the utilities industry.
Utilities are typically geographical monopolies and are government sponsored ones at that. Basically, it is not cost effective for two competitors to compete to provide electrical or gas services in a geographic region due to the economies of scale needed in an area and, as a result, these utilities exchange the right to operate in a given economic region for increased regulation and price limitations on their ability to raise prices.
While this limits the potential profitability of these utilities, it allows these entities to make considerable cash flow and profits in a predictable and safe manner. Given the rise in the stock market in 2016, many of the safer investments such as utilities were left behind and are now an excellent value when compared to other industries. Utilities are considered to be safe investments and are currently trading at bargain prices that appeal to many investors. Examples of quality utilities trading at attractive prices are Con Edison (ED), Southern Company (SO), and Dominion Resources (D). Each have predictable business models, solid cash flow, good dividends, and are trading at great prices.
Another safe industry that is trading at bargain prices is health care real estate investment trusts. The search engine optimization firm SEO MadBeeTech at http://seo.madbeetech.com notes that health care real estate investment trusts are entities that own and rent property to nursing homes, long term care facilities, doctors and medical offices, and other businesses relating to health care. Real estate investment trusts (REITs) are investment vehicles that are able to avoid paying income taxes at a corporate level. In exchange for this benefit, these REITs are required to pay out 90% or more of their net income to shareholders in dividends.
These dividends are then taxed at regular interest rates instead of the preferential rates being charged on ordinary dividends. Health care REITs also have the added advantage of being in an industry where their is an increasing demand for health care services due to an aging of the population at large in connection with the baby boom. As a result, health care reits have been increasing their dividends, earning more money, and taking out debt at affordable rates.
Many of these health care reits have realized decreases in their stock prices due to uncertainty in the prevailing interest rates being presented on the market and did not increase in many cases anywhere near the overall market fluctuation in 2016. As such, they are now trading at bargain valuations. Examples of safe health care reits with bargain prices are Ventas (VTR), Health Care REIT (HCR) and Health Care Properties (HC).
In some cases, an online reputation management firm points out that investors have to look to overseas markets to find attractively priced and safe stocks. One example of this is Vodaphone (VOD) a safe and affordable stock trading at a great valuation. VOD recently approved the sale of 45% of the Verizon Wireless company to Verizon itself and will receive a stock distribution as well as a large cash payment in accordance with this deal.
VOD also announced that they would distribute a large portion of this distribution to shareholders and use the remaining portion to fund stock buybacks, acquisition activity, and will consider other effective deployments of capital While the sale has not been completed, it has been approved by shareholders on both sides and by regulators and will likely be finalized in 2017. VOD is a safe stock based upon these factors and is trading at a discount to its value as a result.
While the stock market has increased significantly in 2017 there are many opportunities out there for investors to make money by finding stocks at bargain prices. Consider the aforementioned opportunities or explore the industries further to find safe stocks with bargain prices.