Mutual fund manager Peter Lynch is one of the most successful mutual fund managers of all time. His average annual return of 29% from 1977 to 1990 turned a $10,000 investment into almost $150,000.
And in his book, One Up on Wall Street, he says of the best possible stocks: First, the name sounds boring. Second, do something boring.
Lynch’s insight was that when it comes to investing, “boredom is beautiful.” Boring companies tend to be undervalued, even if they have strong earnings growth year after year.
Lynch identified some stocks that had performed well during his playing days but were “sluggish.” He has acquired payroll company Automatic Data Processing (ADP), food company Bob Evans Farms (now privately held), concrete manufacturer Consolidated Rock, and even a company that operates a network of funeral homes. did.
He said of his decision to purchase an auto repair service:
“If you blurt out at a cocktail party that you own Pep Boys, you won’t get a big audience, but if you whisper ‘Gene Splice International,’ everyone will listen. Meanwhile, Gene Splice International isn’t going anywhere, while (Pep Boys) just keeps going higher. ”
Because when it comes to investing, Lynch says, boring is often better.
Here are three “boring” stocks that can easily grow your money over the next few years.
“Bowling” Stock No. 1: American Waterworks Inc. (AWK)
Recession or not, everyone needs to flush the toilet…that’s where American Waterworks (AWK) comes in.
Through its subsidiaries, AWK provides water and wastewater services to approximately 1,700 communities in 14 states and serves approximately 3.5 million active customers.
Since 2009, AWK has returned 645% including dividends (compared to the S&P 500’s return of 480%). It has also raised its dividend every year over the same time period, providing further evidence that even “boring” companies can outperform.
“Bowling” inventory No. 2: Sherwin-Williams Co. (SHW)
Sherwin-Williams manufactures and sells paints. It oversees the development, manufacturing, distribution, and sale of paints, coatings, and related products to professional, industrial, commercial, and retail customers.
You could say it’s about as interesting as watching paint dry…but long-term investors definitely won’t complain.
Since the 1980s, Sherwin-Williams stock has returned investors an impressive 128,000%. The stock is up 18% so far in 2024, including a 15.5% dividend increase.
“Bowling” Stock No. 3: Iron Mountain (IRM)
Iron Mountain Incorporated IRM is a global leader in information management services. Founded in 1951 and trusted by more than 240,000 customers worldwide, the company provides a wide range of services including digital transformation, data centers, secure records storage, information management, and asset lifecycle management.
It’s clearly not a very attractive business. But Peter Lynch would approve — IRM stock is up more than 1,000% since 2000, and the company just increased its dividend by 10.5%. Last quarter’s revenue growth was 13%, further evidence that this “boring” company continues to deliver for investors.
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