In two months' time, our government may have to start negotiating Britain's EU exit -- something that's never been done before. It's very hard to predict how major global events will affect the shares in your portfolio. But I believe some stocks are safer than others.
Long-term growth guaranteed?
Pharmaceutical giant GlaxoSmithKline seems to be at the start of a new period of growth. Adjusted earnings are expected to rise by 14% this year. I believe Glaxo has advantages which make long-term growth almost certain.
The global market for pharmaceuticals is expanding. Western-style medicine is still gaining a foothold in many emerging markets. Closer to home, ageing populations in Europe and the USA are increasing demand for many products.
Although some investors have suggested that Glaxo should be split into three standalone businesses -- Vaccines, Pharmaceuticals and Consumer Healthcare -- I like the diversity of Glaxo's current structure. In my view, it helps smooth out localised peaks and troughs and support the firm's 5.5% dividend yield.
A sustained period of poor management could cause problems, but I see this as a fairly small risk. I rate the stock as a very safe long-term buy.
Profit from diversity?
FTSE 250 engineer Senior expects to meet full-year profit forecasts, according to this morning's trading update. The group has two main lines of business, Aerospace and Flexonics. In both cases Senior makes a wide range of specialist parts for use in planes, vehicles and industrial machinery.
Senior's business is exposed to cycles, such as the downturn in the mining sector. But a diverse mix of customers helps the firm to smooth out these downturns. Today's update suggests that growth in aerospace markets will help offset weaker performance in some other markets this year.
The shares have fallen by 30% over the last year, and now trade on a 2016 forecast P/E of 13. My only reservation is that earnings forecasts have fallen by a similar amount over the same period. Senior could underperform in the short term, but I believe it's a solid medium-term buy.
A hidden dividend champion?
There's more growth in public transport than you might expect, judging from Go-Ahead Group's third-quarter trading update. Passenger mileage on its London bus routes has risen by 3% over the last nine months, while rail journeys on Go-Ahead's three franchises have risen by between 2.5% and 5%.
The only area that saw a slight decline was regional buses, where passenger journeys fell by 0.5%. Revenue rose across the board and Go-Ahead says it's on track to meet full-year expectations.
The current forecast for earnings of 177.8p per share puts Go-Ahead on a 2016 forecast P/E of 15. This seems reasonable to me, given the shares' forecast yield of 3.9%.
Go-Ahead's net debt of £260m is comfortably covered by the value of its property and fleet assets. Free cash flow looks strong, which should support continued dividend growth. Although there's always the risk of a major franchise loss, I'm considering adding Go-Ahead or another public transport operator to my own long-term income portfolio.
Roland Head owns shares of GlaxoSmithKline. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.