Too many stocks roar into viewwith a spell of heroicperformance, only to quickly prove themselves paper tigers.Your portfolio doesnt need another over-hyped hero. It needs companies that can quietly deliver the goods year after year, with steady share price and dividend growth. Here are three unsung heroesto consider.
Bunzl Of Fun
The firsttime I looked at Bunzl (LSE: BNZL), almost three years ago, I took a shineto it. I declared itan unsung hero of theFTSE 100, a company that rolled up its sleeves and knuckleddown to the unglamorous task of selling food packaging, cleaning supplies, catering and safety equipment to businesses around the world.
If anything, I underestimated the company. Bunzlsshare price is up a tasty 60% over three years, while the FTSE 100 as a whole returned a stale1.69%. While stock markets have been rocked by everything from Grexit to Black Monday, Bunzl has been quietly doing its business. It is the perfect example of howlong-term stock pickers can afford toignore short-term macroshenanigans.
Bunzl may never grab the glory, but wise investors still set a high price on it. It was expensive three years ago, and is expensive today, trading at a pricey 20 times earnings and witha meagre 2% yield. But ithas has amply justified that valuation. Healthy organic growth and an aggressive acquisition strategy helped wrap up first-half profit growth of 11%, with a steady 6.6% margin and 7% hike to the dividend. Bunzlstill has plenty to sing about.
BT Or Not BT?
If BT Group (LSE: BT-A) is the answer, the question was the right one. BT has surprised everybody to challenge rival Sky on its home ground of Premier League and Champions League football rights, and rewarded loyal shareholdersby growing 200% over the last five years, against just 9% on the FTSE 100.
BT is showing the scale of its televisual ambitions by launching AMC Networks in the UK, the channel behind critically praised dramas Mad Men and Breaking Bad. Once recent acquisition EE is integrated, it should become a major player in the growing quad-play market. Its plans to roll out super-fast fibre show a company that is aggressively expanding on every front, without quite attractingthe glamour it merits, trading at a modest 13.44 times earnings. A strong balance sheet, healthy cash flow and 10-15% dividend growth suggest BT will keep singing.
Showing The Way
When I last looked at contract catererCompass Group (LSE: CPG) I admired astrong, solid company whose clients included 90 of the Fortune 100. Management was bullishabout the growth opportunities in global food and support services and rightly so, because the share pricehas headed north since then, rising is up 45% over the last three years.
My only quibble was that the stock traded at what I thought was a relatively pricey 18 times earnings, but today it is even pricier at 20 times earnings. Sometimes, it is worth paying a premium. Compass continues to point the right way, although the falling oil price has knockeddemand fromthe Remote & Offshore oil and mining sector. Healthy Q3 organic growth of 5% and 7% in the US, alliedto improving margins, suggest that Compass still has a strongsense of direction.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.