1 mega-cap stock and 1 small-cap I'd buy and hold for the long term

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BHP Billiton mine

A mega-cap, which reported its full-year results earlier this week and a small-cap, which has released its half-year report this morning, may be at opposite ends of the FTSE All-Share index, but I'd be happy to buy and hold both for a long time.

Momentum

Henry Boot(LSE: BOOT) raised its expectations for 2017 as early as its AGM in May. Today, it reported a good first-half performance and said momentum has continued into the second half, in line with the upgraded expectations.

First-half operating profit was 8% ahead of the same period last year and earnings per share (EPS) increased 10%, with the company seeing "higher levels of activity across all business segments."

Boot's activities range from land promotion, property investment and development to plant and tool hire and operating the A69 toll road. As such, most of its businesses are exposed to economic cycles. However, it said today: "Whilst we remain mindful of a continued degree of economic and political uncertainty, sentiment amongst our customers and clients remains positive."

Conservatively managed and cheap

Boot maintains a robust balance sheet to weather periods of economic turbulence. Net debt at 30 June stood at £62m, giving conservative net gearing of 26%, and management said it expects land and property receipts in the second half to reduce debt and gearing further still by the year-end.

The share price is little changed at 305p on the back of today's results, valuing this FTSE SmallCap firm at £403m. Analysts are forecasting EPS of around 25p for the full-year, 16% ahead of last year's 21.5p. This results in a price-to-earnings (P/E) ratio of 12.2 and a price-to-earnings growth (PEG) ratio of 0.76. On the dividend front, the board lifted the interim by 12% today, suggesting a full-year payout of above 7.8p and a yield of 2.6%.

The low P/E, a PEG below the fair-value marker of one, a dividend covered more than three times by earnings and conservative management of the business combine to make this a stock I'd buy and hold for the long term.

Firm focus on shareholder value

Mining mega-cap BHP Billiton(LSE: BLT) was guilty -- like most of its peers -- of extravagant spending at the height of the commodities cycle. Indeed, as the industry slumped, it found itself strapped for cash to the extent that it had to cut its dividend for the first time in its history.

New management is firmly focused on disciplined capital allocation, strong cash flows and shareholder returns. In its annual results this week, the FTSE 100 giant delivered free cash flow of $12.6bn -- its second-highest year ever -- and a reduction in net debt to $16.3bn from $26.1bn. It reported a 455% increase in EPS to 126.5 cents and a 177% hike in the dividend to 83 cents. At a current share price of 1,450p, this gives a P/E of 14.7 and a dividend yield of 4.5%.

With some notable activist investors on the shareholder register to keep management honest on delivering shareholder value (the company is now looking to dispose of its non-core US shale assets and has deferred its $13bn Jansen potash project), I believe now could be an opportune time to buy and hold the stock for the long term.

5 top buys

I'm keen on Boot and Billiton as long-term investments but have they made the cut for the five elite stocks identified by the Motley Fool's experts as the very best businesses to deliver for shareholders through thick and thin?

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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes