LONDON -- It's getting tiresome, but once again the eurozone is threatening markets. Shares wobbled last week but just held on after an 11th-hour deal to "rescue" Cyprus was agreed. The wobble showed that the confidence powering markets up this year is fragile. If Cyprus hadn't secured funding from the "troika" of the IMF, the EU, and the ECB, then stocks would have plunged.
The snowball keeps rolling
That's worrying, because the Cyprus deal has stored up more trouble ahead. It has loaded the country with debt and simultaneously trashed its financial sector, the mainstay of its GDP. Capital controls mean a euro in Cyprus isn't the same as a euro in Germany, and confidence in Southern Europe's banks has been undermined.
What should investors do? It's too much of a bunker mentality to just put your money in a (non-eurozone) bank. Europe will probably muddle through, and 2013 could be a great year to be in the market.
But I think there's a good case for having a slug of safe shares that would survive a euro blow-up. They are shares that:
- Have low exposure to the eurozone.
- Aren't exposed to the financial sector.
- Are in defensive sectors.
- Have growth prospects.
Here are three I have picked.
1. Tesco (LSE:TSCO) (NASDAQOTH:TSCDY)
Tesco has lost its halo, but it's repairing past mistakes. The U.K.'s economy is vulnerable to events in Europe, but Tesco's 30% share of the grocery market makes it resilient. It's not short of ideas for growth, from coffee shops in the U.K. to online sales in China.
2. Centrica (LSE:CNA)
British Gas, Centrica's downstream utility, is well insulated from economic turmoil. Last week's bad weather exposed the U.K.'s shortage of gas storage, and the Government's "dash for gas" is sure to benefit Centrica's upstream gas-production business.
3. Unilever (LSE:ULVR) (NYSE:UL)
Strong brands and the indispensible nature of Unilever's personal-care and health care products give it its defensive characteristics. Expansion in emerging markets provides growth. A quarter of Unilever's sales come from Europe, but that's lower than for Reckitt Benckiser.
Boring is good
Two of my three picks are included in "Five Shares To Retire On," a brand-new report from the Motley Fool. It describes a mix of five solid (some might say boring) shares in diverse sectors that could form the core of a portfolio -- shares that you can tuck away and not have to watch every day.
Whether you're saving for retirement or building an investment portfolio for any other reason, it's sensible to have some solid, dependable core holdings. To find out which of my three picks made the grade and discover the identity of the other three stocks, you can download the report straight to your inbox. Just click here -- it's free.