Do Nothing Club stocks could spring to life

CERTAIN predators can’t see their prey if the prey holds still. It’s the same with some investors. Stocks that do nothing for a while may vanish from investors’ consciousness. But stagnant stocks can sometimes be good buys.

Hence, my Do Nothing Club. It’s an annual compilation of stocks whose price is little changed during the past year, and also the past month, but that I think may spring to life.

A 68 percent return

Last year was a particularly good one for the Do Nothing brigade. My four picks averaged a gain of 68 percent, while the S&P 500 declined 2 percent, after taking dividends into account.

State Auto Financial Corp., a little-known car-insurance company, was taken over by Liberty Mutual and scored a 187 percent return. Weis Markets Inc. (WMK) returned 52 percent, Regeneron Pharmaceuticals Inc. (REGN) 28 percent and Hills Bancorporation (HBIA) 9 percent.

Now it’s a lazy spring again, and time for some new Do Nothing picks.

Cigna

I’ll start with Cigna Corp. (CI), a huge health insurer whose total return from a year ago is almost exactly zero.

Over the past 10 years, Cigna has been far from stagnant. It’s returned 516 percent, which compares very nicely with 264 percent for the S&P 500. After paying only 4 cents a share in dividends for years, Cigna hiked its dividend to $4 a share last year. The latest quarterly dividend suggests a $4.48 per-share payout this year. In my view, there is room for further dividend increases.

Micron Technology

Micron Technology Inc. (MU) has been a “ten bagger” for the past decade. An investment of $1,000 10 years ago would be worth more than $10,000 today.

Lately, though, this maker of memory chips gets little respect, and the stock is down about 6 percent in the past year. It sells for only nine times recent earnings and only six times the earnings analysts expect for fiscal 2023.

Met Life

There are two things that I believe might help Met Life Inc. (MET) do better in the next year or two. I believe that the pandemic will, at some point, wane. That would mean fewer claims on group life and health insurance policies.

Interest rates, long in the basement, are rising. Insurance companies typically invest their “float” — money received in premiums and not yet needed for claims — in bonds. Higher rates hurt the price of existing bonds but help make new ones a more profitable investment.

Ingredion

Based in Westchester, Illinois, Ingredion Inc. makes ingredients for food, beverage, paper products, and cosmetics. One thing I like about ingredient stocks is that you don’t pay a premium for brandname glamour.

Ingredion stock over the past decade has usually sold for about 16 times earnings. Today, the multiple is only 13.

Marten Transport

At a time when consumers are complaining about shortages in grocery stores, a company like Marten Transport Ltd. (MRTN) should have some pricing power. Marten, based in Mondovi, Wisconsin, operates refrigerated trucks to transport food and some other temperature-sensitive goods.

I consider 10 percent to be a good return on invested capital. Marten fell short of that for years but has bettered that mark in the past two years, and profits appear still to be on the upswing. The stock sells for 1 percent more than it did a year ago. The company is debtfree, a rare quality these days.