If someone described me as boring but beautiful, I’m not sure whether I’d take it as an insult or a compliment. Fortunately, FTSE 100 stocks don’t have feelings, so I’m fine to describe a company as such. To that end, here are a couple of stocks that might not always make front page news, but equally can provide my ISA with strong returns that allow me to sleep soundly at night.
Packaged up nicely
First up is DS Smith (LSE:SMDS). The international packaging company was first listed on the stock market back in the 1950s and has stood the test of time. It has chalked up year after year of profits, even during the pandemic.
A key factor in this is the nature of its operations. Packaging and recycling probably does fit in the boring category, but it certainly is a profitable enterprise to be a part of! Further, certain packaging types are a necessity for other businesses to support their products sold. So there has (and I believe always will be) a constant flow of orders.
Recently the firm has also been pushing harder on using sustainable, plastic-free packaging. This will make it appealing for ESG-focused investors. It also makes it future-proof, as I expect more focus to be on sustainable business in the coming years.
The stock is up 53% over the past year. Given the recent rally, it’s currently close to three-year highs. Some might see this as a risk, that it’s potentially a little overvalued right now. I get this, but as my ISA is the place to put long-term investments, I’m not overly concerned.
Admiring the Admiral
The second idea is Admiral Group (LSE:ADM). As a leader UK insurance firm, it provides everything from car cover to pet insurance. In the past year, the share price has rallied by 19%, higher than the FTSE 100 average.
I’m not sure any of us at school said that we wanted to have a career in insurance when we grew up. It’s true that the business isn’t that exciting. Yet in a similar way to DS Smith, the business model is proven to work. In charging for insurance premiums, Admiral is able to generate high levels of positive cash flow. This helps to keep the business out of any liquidity problems. The latest annual results showed it having a solvency ratio of 200%.
I also like the business for the long term due to the diversification of revenue. Sure, it’s still an insurance company. But different markets are uncorrelated, for example, motor insurance and animal cover. This means that it should be able to weather any storm in a particular division.
One concern I do have is the scope for high growth. The sector is mature. Although there’s room for Admiral to grow market share further, it’s never going to be able to offer me huge share price returns.
I like both ideas and am thinking about adding them to my portfolio when I get some free cash.
This post was originally published on Motley Fool
