Many think investing in the stock market is risky because of what we hear from mainstream media. However, stock investing is not as scary as many make it out to be, and some ways to specifically minimise your risk are to invest in resilient businesses with strong balance sheets. Let’s explore three such companies now.
No. 1: Raffles Medical Group Ltd
First up is Raffles Medical Group Ltd (SGX: BSL), a private healthcare group with operations in 14 cities spread across five countries. It serves more than two million patients and 7,000 corporate clients.
Why is it a stable business? The healthcare industry is a resilient sector. No matter what the economy does, there will always be a demand for doctors. An aging population and the rising affluence in Singapore should also bode well for Raffles Medical for the long term.
How’s its balance sheet? As of 31 March 2019, Raffles Medical had S$111.8 million in cash and S$126.0 million in total borrowings. The company’s balance sheet had turned into a net debt position mainly because of project expenditures incurred for its two China hospitals. Once the hospitals start contributing, Raffles Medical should be able to pare down its debt and return to a net cash position, which has been the case before.
At Raffles Medical’s current share price of S$1.05, it has a price-to-earnings (P/E) ratio of 27 and a dividend yield of 2.4%.
No. 2: Sheng Siong Group Ltd
Sheng Siong Group Ltd (SGX: OV8) is next in line. The company is a Singapore-grown supermarket chain with outlets mainly located in the heartlands of our country. In November 2017, the company ventured into China by opening a store in Kunming. The supermarket chain plans to open a second store in Kunming in the current quarter.
Why is it a stable business? Sheng Siong is known to be a low-cost seller of consumer goods. Even then, the supermarket chain has managed to increase its gross margin and net margin over the years. Its wide range of in-house brands also lowers the cost for consumers. Such low-cost products should be more in demand during an economic downturn.
How’s its balance sheet? Sheng Siong’s balance sheet is rock-solid. The company ended March 2019 with S$86.3 million in cash and zero debt.
At Sheng Siong’s current share price of S$1.10, it sports a P/E ratio of 23 and a dividend yield of 3.1%.
No. 3: VICOM Limited
Last but not least is VICOM Limited (SGX: V01), Singapore’s leading provider of inspection and technical testing services.
Why is it a stable business? According to the Land Transport Authority of Singapore, vehicle owners are required to send their vehicles for regular inspections to ensure that they are still in roadworthy conditions. Any vehicle that does not pass the examination is barred from renewing its road tax and, therefore, will not be allowed on the roads. People will likely still want (and need) to drive their cars even if the economy goes south.
How’s its balance sheet? VICOM’s balance sheet is as strong as ever with S$112.8 million in cash and zero debt as of 31 March 2019.
At VICOM’s current share price of S$6.98, it has a P/E ratio of 18 and a dividend yield of 5.2%, excluding any special dividend.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Raffles Medical, Sheng Siong, and VICOM. Motley Fool Singapore contributor Sudhan P owns shares in Raffles Medical and VICOM