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As a difficult macroeconomic and geopolitical calendar year draws to a close, fears of a stock market crash still abound.
However, I do not wait for any decline to buy quality stocks for my holdings. I’m aiming Safe store (LSE:SAFE) shares when you soon have some cash to invest. Also I would like to buy more Topps Tiles (LSE: TPT) also shares. This is why!
Storage solutions
Safestore is one of the largest storage companies in the UK. The company has a well-known brand and a good track record of performance and growth.
stocks have struggled this year, but buying cheaper stocks is ideal for me. As I write, they are trading at 761p, down 16% from 911p at this time last year.
The biggest risk that I think could affect Safestore’s performance and shares is that of increasing competition in the storage sector. There are fairly low barriers to entry into space. This means that competitors with the right financial backing and leadership could enter the market to take away Safestore’s dominant position.
However, I am not worried about the mentioned risk. This is because Safestore has extensive experience in navigating this burgeoning market. He has continued to grow and dominate in the UK and his growth aspirations make him an exciting prospect for me. The company has recently opened European branches in Spain. Additionally, a potential foray into the United States – an underdeveloped storage market – could generate lucrative returns and growth.
Currently, a dividend yield close to 4% is tempting to me. However, I understand that dividends are never guaranteed.
Finally, Safestore stock appears to be excellent value for money with a price-to-earnings ratio of just six.
Tile retailer
Topps Tiles is a tile and hardwood flooring retailer. The company sells its products in larger retail units outside the city and online.
I have owned Topps stock for some time. On paper, my investment is down slightly but that’s not a problem for me. I’ve received dividends that I’m reinvesting so far, and what’s more, my five- to ten-year investment mantra means I’m not worried about short-term performance.
Topps stock has gone up and down over the past 12 months. They have risen 15% from 40p this time last year, to current levels of 46p.
I think now is a good time to add more stocks to my holdings. An 8% dividend yield makes the opportunity for passive income worth it alone. Furthermore, the share price volatility means it still appears to be good value for money with a price-to-earnings ratio of just eight.
From a risk perspective, Topps is a small company with a large store presence. Maintaining and operating physical stores when online shopping is only increasing could be a risky move in the future. However, I believe this is outweighed by its experience, wide reach, as well as its dominant market position with its strong brand power.
Topps has posted positive performance over the past three years since the pandemic and each year has delivered growth. Although short-term performance could be affected by the current economic outlook, I believe the business will continue to provide passive income and grow over the long term.
