It’s been a tough year to watch especially if your portfolio is heavy on growth stocks.
Technology stocks, in particular, have taken an even larger hit.
It’s not easy to keep your emotions in check when you see the flood of red in your portfolio.
While scary, the good news is we are playing the long game, and such declines are just temporary for strong companies that have a robust competitive moat and good track record of performance.
PM Lee has warned of a possible recession in the next two years that may trigger a bear market, giving you a great opportunity to accumulate the stocks of strong companies on the cheap.
Below are three companies I would look to add if a bear market arrives.
1. ComfortDelgro Corporation Limited (SGX: C52)
The first is ComfortDelgro Corporation Limited, or CDG, Singapore’s land transport giant.
The group has a fleet size of about 35,000 buses, taxis and rental services.
Its geographic presence also spans Singapore, Australia, China, the United Kingdom, Ireland, Vietnam, and Malaysia.
Besides being Singapore’s largest taxi operator with a 60% market share, CDG’s Inspection & Testing Services segment, through its wholly owned subsidiary VICOM (SGX: WJP), is also Singapore’s largest vehicle inspection company with 35 inspection lanes across seven centres.
CDG’s strengths abroad are also noteworthy.
Through targeted acquisitions and investments, CDG has become the United Kingdom’s second-largest coach operator.
For its fiscal 2022’s first quarter (1Q2022) earnings, revenue inched up 3.9% year on year to S$895.9 million while net profit jumped 30.4% year on year to S$76.7 million.
CDG’s robust businesses and market dominance in its multiple segments make this blue-chip stock a darling to own.
In addition, investors can also hope for better dividends should the company execute well, just like how it tripled its FY2021 dividend to S$0.042 from FY2020’s S$0.0143.
At a unit price of S$1.44, CDG currently sports a dividend yield of 2.92%.
2. Singtel (SGX: Z74)
Next up is Singtel, our home-grown telco giant and also another blue-chip darling.
From mobile services (which include calling, roaming, data services etc) to Enterprise ICT services (which include government and enterprise projects e.g digitalisation), Singtel’s business divisions demonstrate high barriers to entry.
Singtel doesn’t rely solely on the Singapore market for revenue contribution.
In FY22, its Australia’s Consumer segment revenue stood at 43.2%, or A$6.6 billion of total group revenue of S$15.3 billion.
Across other regions, Singtel gets 13.5%, or S$2 billion, of its group revenue from its regional associates, which takes in contributions from Indonesia, Philippines, India, and Africa.
Not to forget, Singtel’s business-to-business (B2B) arm, which comprises NCS and Group Enterprise, are deeply rooted in government projects and data centre scale ups.
Together, they make up about S$6.1 billion (NCS: S$2.3 billion, Group Enterprise: S$3.8 billion) of its FY22’s revenue.
Essentially, B2B businesses make up about 40% of Singtel’s total revenue.
With the 5G scale ups and the different initiatives that Singtel has done to unlock value for shareholders, Singtel’s moat should become even stronger over time.
Singtel has a dividend policy to pay out 60-80% of underlying net profit.
Investors who are looking to ride Singtel’s long term growth while also being paid in dividends can consider investing in the company.
Singtel proposed a final dividend of S$0.048 for FY2022, which was double that of S$0.024 in FY2021.
Based on the total dividend per share of S$0.093 Singtel paid out for FY2022, and at a unit price of S$2.58, this translates to a dividend yield of 3.6%.
3. Q&M Dental Group (SGX: QC7)
Lastly, we have Q&M Dental Group, or Q&M Dental.
Q&M Dental is the largest private dental clinic operator in Singapore with 99 outlets across the island.
It also has 41 dental outlets in Malaysia, and one dental clinic in China.
Q&M Dental clinics are strategically and conveniently located in many of the shopping centres, MRT and bus stations around Singapore.
Other than dental clinic outlets, Q&M Dental also operates a unit that manufactures dental materials and distributes dental equipment and supplies.
Because of the pandemic, Q&M Dental, through Acumen Diagnostic (effective ownership of 67.15%), started providing COVID-19 PCR home and offsite swab services at all of its clinics around Singapore.
As the government ramped up its fight against the virus, Q&M Dental’s Medical laboratory segment saw a more than 16-fold revenue growth in FY2021 to S$37.1 million, compared to S$2.2 million a year earlier.
Post-COVID, Acumen’s R&D is developing a pipeline of PCR tests for infectious diseases and cancer.
In FY2021, Q&M Dental paid a total dividend of S$0.04.
For its fiscal 2022 first quarter (1Q2022), it paid out an interim dividend of S$0.004, which at a unit price of S$0.485, translates to a 7% trailing 12 months dividend yield.
Get Smart: Safe and stable
The three stocks above all exhibit strengths and dominance in their respective fields.
Regardless of the state of the stock market, they remain resilient and can withstand downturns without going under.
If markets do plunge suddenly and without reason, I’ll be looking out for these stocks to add to my investment portfolio.
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Disclaimer: Kent Lee owns shares in all the companies listed above.