Safe Places to Stash Your Cash

 | Mar 21, 2013 | 10:30 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

hci

,

kro

,

msft

,

noc

,

intc

If you are a conservative investor by temperament, of if you believe the stock market is toppy at the moment, you may be seeking some relatively safe stocks.

Just to be clear, I'm not in the conservative camp. I think the stock market's party is in the 10 p.m.-and-just-getting-rolling phase. In my opinion, it will be a long time before it reaches the raucous 2 a.m. neighbors-calling-the-cops phase.

Still, the S&P 500 Index has returned more than 151% since the gigantic bear market ended in March of 2009. Some folks want to take chips off the table. But they fear U.S. Treasury bonds -- rightly in my view -- and despise the puny yield on bank accounts.

For them, here are five stocks that yield at least 3% in dividends, have strong balance sheets and are likely to hold up decently in a market decline.

Homeowners Choice (HCI), based in Clearwater, Fla., is a small property-and-casualty insurance company who shares sell at only 8x earnings -- even though its earnings have been growing at 20% a year. It specializes in the Florida market. That state can be a hurricane alley, but I believe Homeowners Choice has set its premiums appropriately to mitigate the risk, and also uses reinsurance arrangements for the same purpose.

Kronos Worldwide (KRO), which has headquarters in Dallas, makes titanium dioxide pigments.  Margins can be skimpy in the chemical industry, but Kronos had a pretax margin of better that 16% last fiscal year. The dividend yields at 3.7%.  Harold Simmons, the board chairman, is also chairman of Valhi (VHI), which owns about 50% of Kronos. I consider Simmons a canny and experienced businessman.

For those who prefer larger stocks, Microsoft (MSFT) looks good to me right now. It has a durable franchise in operating systems and office software, trades at 11x earnings and has a fat pretax profit margin of 30%.

Contrarian investors, meanwhile, may want to take a close look at Northrop Grumman (NOC). The federal defense budget is likely to be cut further, beyond even the sequester. But I believe that news is already in the stock. Why else would a company's shares trade at only 9x earnings, even with a 16% average earnings growth rate the past five years?

Finally, consider Intel (INTC), the largest U.S. semiconductor maker. I have owned it for clients in the past, and I sold it in recent months, partly because I wanted to emphasize smaller stocks. Still, Intel has some all-star numbers: a return on equity of about 22%, a dividend yield above 4% and a stock selling at only 10x earnings.

For those who think discretion is the better part of valor, I suggest a discreet look at these stocks.        

John Dorfman is chairman of Thunderstorm Capital LLC, a money-management firm in Boston. He can be reached via email here.

Columnist Conversations

big X up 8%+ after hours. 30 last. nice short squeeze.
Market woke up a bit today to the fact that the tensions emanating out of Ukraine are not going anywhere as th...
In my article this morning, I speculated this could be the bottom for Twitter. I thought investors would shif...
Heidrick & Struggles (HSII) posted better than expected numbers. The shares popped early, fell back to neu...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.