LONDON -- Banks downgraded, Germany being tough on Greece, Spanish debt worries (with Italian stress waiting in the wings), commodities with leaden prices -- it's time to have a look at a "batten down the hatches" portfolio again.
It was on this basis -- and with largely the same fears in place -- that I took a look at six "baked bean and shotgun" shares in November. These are companies that should weather a storm pretty well, come what may. Since then, the FTSE 100 has put on 7.5%. The six ultra-defensive shares, meanwhile, are up more than 17.4% on average, including dividends paid or owed. Admittedly, the results are flattered by the takeover of Robert Wiseman Dairies. Nevertheless, the results stand.
When I looked at the six shares again in April, I decided to bring in Camellia (LSE: CAM.L ) -- international tea grower, engineer, and more -- to supply our tea at a share price of 9,740 pence. Camellia is probably the best value share I know of, but you really will need to be patient with this one.
I've also decided to boot out Lees Foods at a decent profit due to a cheeky management buyout at a knock-down price. The potential takeover was explored in detail in a Foolish discussion. The bid approach comes from a company formed specifically for the acquisition, which includes the Lees directors.
Instead, I'm bringing in AIM-listed confectionery and snack foods group Zetar for something sweet to go with the tea. So the six baked beans and shotgun shares now look like this:
J Sainsbury (LSE: SBRY.L ) remains the best value of the big three U.K.-listed groups for me to buy the beans from. It's also the highest-yielding -- 5.8% at 293 pence. Its credentials as a value candidate were explored in depth by Stephen Bland recently. He concluded: "Sainsbury looks an attractive big-cap value play to me ... particularly with the very low P/TB figure, aided by a decent yield to sweeten the wait."
Meanwhile, Wm Morrison is also looking tempting to me again at 269 pence, and I've bought back in.
Shares in BP (LSE: BP.L ) have been suffering of late in line with the drop in oil prices. I see no reason to panic here -- quite the opposite, in fact, and I expect the company to do well over time.
We may soon all be driving to the supermarkets for our baked beans in electric cars, but it will take a while for the world's demand for oil to recede. Meanwhile, BP's valuation of less than six times next year's expected earnings, its near 6% anticipated yield, and a balance sheet that looks able to withstand the final settlement figure with the U.S. government still make it a solid buy-and-hold for me.
Tea grower Camellia can supply our tea. At 9,500 pence, this old-fashioned conglomerate is valued at 264 million pounds. But the group has no net debt, net cash of more than 72 million pounds, net current assets of 121.7 million pounds, more than 361 million pounds in net assets, and 354 million pounds in net tangible assets.
It's also growing steadily, but it sadly pays a paltry dividend of around 1.1%, covered many times over by cash flow and earnings; otherwise, it would have the lot.
I still see no reason to sell British Polythene Industries (LSE: BPI.L ) , whose products are essentials for everyday life. Now 326 pence, the company is valued around six times next year's expected earnings with a respectable 4% yield.
Carr's Milling Industries
Carr's Milling Industries (LSE: CRM.L ) was a share that had everything back in July 2009 at 425 pence. Today, at 857p, the shares are on a price-to-earnings ratio of around 9.5, with NTAV per share of 674 pence and a 3.2% yield -- not bad for such a defensive business. That's one to leave in the defensive portfolio for now.
AIM-listed confectionery and snack foods group Zetar looks a good value to me at 195.5 pence. I don't expect fireworks, which is almost always the way with defensives. But I am hoping for steady growth from a company that's on a prospective P/E of just 4.7 for no good reason that I can see.
Finally, let me finish by adding that more share ideas can be found within this Motley Fool report: "8 Shares Held By Britain's Super Investor." The guide reviews the investing approach and portfolio of City dividend legend Neil Woodford and is free to download today.
Further investment opportunities: