Two Safe and Steady Stock Investments: Norfolk Southern & BHP Billiton


With many investors scared by the longevity of this economic downturn some have been looking for strong long-term investments to shore up their portfolio. Lucky for you, I have come across two sure winners that are prepared to rise for the long run. Safe and steady always wins the race.

BHP Billiton Ltd. (NYSE: BHP) is an Australian mining giant. They are the world’s largest natural resources company, holding important positions in at least a half-dozen important metals and minerals. Economies of scale in the mining business are so great that the likelihood of significant new competition is slim. Many might ask, why doesn’t everyone own this stock? That’s because, apparently many investors still are scared off and think of commodities as highly cyclical, low-margin businesses. Short-term some might be right but we are looking at a long-term investment perspective like a window of 3-5 years not a couple months. What makes us enticed to invest in BHP are it’s great business from top to bottom. A couple numbers that do standout are a PEG Ratio of 0.54, P/S of 2.93, ROA of 22%, ROE of 47%, little to no debt, strong technical readings and qualitative factors, plus a 3%+ dividend. Long-term I believe BHP is a safe bet especially as the global economy continues to recover.

Norfolk Southern (NYSE: NSC) is an old-fashioned railroad company. While some might be skeptical and think this company seems stodgy in this group you need to factor in and take for account that no one is building any new ones. Railroads capitalize on large economies like the U.S. and China and have been cheaper alternatives to truck and air delivery especially in the heavily congested areas of the east coast of America, where Norfolk Southern primarily operates. Railroads are sensitive to economic cycles; they are thriving when demand for raw materials is high and struggle when it’s low. Long-term, I think we are still in the middle stages of what is going to be a long recovery, from which NSC should benefit greatly. NSC is a solid company top to bottom; they have some attractive numbers that appeal to me as an investor. NSC has a PEG Ratio of 0.92, P/S of 2.38, cash on hand, efficient operating margins, 3% dividend, and strong analyst outlook all of which bode well for their long-term success. NSC isn’t that hot flashy tech stock or that speculative play that’s going to triple in the next year but when we’re talking about the long-term it’s a perfect stock to own, slow and steady wins is fine with me. 

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