How have these shares, picked to beat a bear market, fared in the recent bull run?
Mr Market's had the collywobbles again -- this time over Spanish debt.
OK, we haven't experienced the real earth tremors we did last autumn, but the FTSE has still lost 4.5% over the last three weeks. So I thought it would be a good idea to remind myself how important it is to keep my feet on the ground.
Near the depths of last year's winter slump, during late November, I took a look at a half a dozen companies of varying size whose business models should see them through whatever the market does. I called them 6 baked bean and shotgun shares -- the kind of companies whose shares should do OK if financial Armageddon was nigh.
The market's had a great bull run since then. The FTSE has put on 11.6% in four and a bit months. You'd imagine this would have been a fairly bad time for defensives. But not so -- in fact, the six have managed a mean average improvement of 16.7% including dividends. That said, these results were skewed by the takeover of Robert Wiseman Dairies. Taking out this anomaly puts the average gain below the FTSE's at 8.6%; still not a bad performance for such defensives in a bull market.
Here are the six revisited:
Sainsbury (LSE: SBRY), remains my favourite supermarket of the big three UK-listed groups and the highest-yielding. But I think all three -- i.e. including Morrison (LSE: MRW) and Tesco (LSE: TSCO) -- would make good investments from this point. Tesco's shares have suffered badly since the January profits warning, which made them look reasonable value for the first time in a long time to me.
Sainsbury, meanwhile, is trading well whilst its balance sheet and asset value of 293p per share, versus the current price of 303p means it still makes an obvious target for a predator. In the meantime, we still need somewhere to buy our baked beans if the Spaniards decide they can pay next to nada on their debts.
It will soon be the second anniversary of the tragic Deepwater Horizon oil spill; an event which still hangs over BP (LSE: BP), whose shares have taken a hammering of late.
Nevertheless, the fall to 456p simply makes them a stronger long-term buy in my opinion. We may soon all be driving to the supermarkets for our baked beans in electric cars, but it will take a while for the world's demand for oil to recede. Meanwhile, BP's lowly valuation of around 6 times next year's expected earnings, its near 5.3% anticipated yield, and a balance sheet which looks able to withstand the final settlement figure with the US government make it a solid buy and hold for me.
Robert Wiseman Dairies was taken out a fantastic premium to the prevailing price, so we need a replacement. Dairy Crest (LSE: DCG) may seem like the obvious choice, but its balance sheet isn't strong enough for my liking. Instead, we'll bring in the international tea grower, engineer and financial services firm Camellia (LSE: CAM) at 9,740p.
This diverse company is great value all round, with a rock solid balance sheet including asset value per share of 12,790p, and around 230p per share in cash. It is also growing steadily. Unfortunately, it pays a paltry dividend of around 1.1%, covered many times over by cash flow and earnings. So you'll need the patience of Job.
I see no reason to sell British Polythene Industries (LSE: BPI) at the improved price of 342p. It's valued at just 6.3 times next year's expected earnings, with a respectable 4% yield.
Carr's Milling Industries
Carr's Milling Industries (LSE: CRM) is also doing well. I recently explained why this share had everything back in July 2009 at 425p. Today, at 806p, the shares still trade on a P/E of under 9, with asset value per share of 645p and a 3.5% yield; not bad for such a defensive business.
And finally, Scottish tiddler Lees Foods (LSE: LEE) has done quite well. But news on Tuesday that it is the subject of a 230p bid approach by a company which includes all Lees' directors looks like a cheeky bid to get it on the cheap.
We'll see what transpires here, but if it goes through, we'll have to find a replacement, which may well be another AIM-listed confectionery and snack foods group called Zetar (LSE: ZTR).
People talk about a "flight to quality" during the scary times. I think it's best not to leave it in the first place.
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> David owns shares in Sainsbury, BP and Tesco. The Motley Fool owns shares in Tesco.