The Beauty of Boring Stocks

Instead of popular but volatile stocks, owning under-the-radar defensive gems will let you sleep at night.

- ADAM SHELL

THE SEXIEST, MOST POPULAR stocks have a speculative allure that’s hard to deny. Names like GameStop, Tesla and Virgin Galactic get the paparazzi treatment from the media, grab the attention of day traders and often top the list of Wall Street’s big daily gainers—and losers. Hype comes at a price. High profile stocks tend to have pricey valuations and short or inconsistent track records. Wild price swings can make it hard to stay invested if you can’t deal with nail-biting volatility.

Instead, consider some lower-profile and less volatile stocks. “Boring is beautiful,” says Jim Tierney, chief investment officer of concentrated U.S. growth at fund company AllianceBernstein. “These under the-radar stocks that have very predictable businesses—they work.”

Sleep-tight stocks tend to be established firms with a competitive advantage in slow-growth industries. They generate predictable sales and profit growth, no matter whether the economy is booming or contracting. They tend to be financially stable, with strong balance sheets, which reduces the odds that they’ll get into financial trouble and allows them to pay dividends. “Steady Eddie” stocks take the edge off investing, says Nick Kalivas, head of exchange traded funds and indexed strategies at Wall Street firm Invesco. “Slow and steady wins the race.”