It has been a very rough time for the technology segment of the S&P/ASX 200 Index (ASX: XJO). Who knows when the falls will stop? While I’m seeing opportunities in that sector, I also think there are other ASX 200 shares that could be a bastion of stability.
Not every business is exposed to AI in the way that software stocks are.
There are some names that have resilient earning and can easily weather the storm, in my view. These stocks include those with exposure to essential products and services.
Coles Group Ltd (ASX: COL)
You can’t get much more of an essential service than food and Coles is one of the largest food retailers in Australia with its national supermarket chain and liquor division which includes Liquorland.
The ASX 200 share has delivered regular sales and earnings growth, funding a similar growth pattern as the dividend.
It doesn’t need to continue outperforming Woolworths Group Ltd (ASX: WOW) to continue being a good investment, but that makes it particularly compelling as a sign that customers are liking the products on offer.
With a growing Australian population and strong e-commerce growth, the prospect for ongoing earnings growth looks good, particularly with its new automated distribution centres.
According to the forecasts on CommSec, the Coles share price is valued at 24x FY26’s estimated earnings with a forecast grossed-up dividend yield of 5.1%, including franking credits.
Telstra Group Ltd (ASX: TLS)
Another essential service that most Australians and businesses can’t seem to do without is an internet connection.
Telstra is the leading Australian telco, with the biggest market share of mobile and NBN connections.
Having the best network and the most subscribers allows Telstra to generate the strongest profits compared to its peers, as well as investing the most in its network further.
Telstra’s subscriber base has regularly grown over the last few years and the operating leverage has enabled its operating profit (EBITDA) margin to increase.
I’m particularly hopeful the ASX 200 share can win more 5G-powered home internet connections because that would mean a significantly higher profit margin from each connection, rather than that margin going to the NBN.
According to the forecast on Commsec, the current Telstra share price is valued at 25x FY26’s estimated earnings with a possible grossed-up dividend yield of 5.8%, including franking credits.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is the most diversified ASX 200 share, in my view.
It’s not just a telco or a supermarket business. Rather, it owns a portfolio across a broad range of ASX shares, international shares, private businesses, property and credit.
Some of the sectors it’s invested in include telecommunications, resources, industrial property, building products, swimming schools, agriculture, electrification, healthcare and more.
By taking this diversified approach, along ensuring its investments have defensive cash flow, it means the ASX 200 share is likely to deliver resilient earnings, even during economically uncertain times, as well as a steadily-growing dividend.
I’m backing this business to be around for decades to come.
Its ability to shift its portfolio means, in my view, it can always ensure its portfolio is future-focused and generate good returns for shareholders. Additionally, that wide investment horizon gives the company a great chance to find the best opportunities.
The post Why it’s a great time to buy these ASX 200 shares in these rocky times appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Telstra Group, Washington H. Soul Pattinson and Company Limited, and Woolworths Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.