The FTSE 100 hit record highs this week, and yet few of us in the UK are feeling as jubilant as the stock market’s performance would seem to suggest.

With worries abounding around debt, Rachel Reeves’s November Budget, and global jitters surrounding the US shutdown, some doubt we will see that stock market chart pointing ever higher in the months to come. 

Whether you hold mainly UK stocks or have exposure to US technology firms, where investors fear an AI bubble, you may think it is time to get off this rollercoaster. You could sell up and park winnings in cash to wait out a downturn, but you risk mis-timing the market and your money losing value to inflation along the way.

Instead, consider investing in some solid stocks with robust balance sheets, tons of cash and dividends to keep you going until the market ticks up again.

Midas believes that solid returns from well run companies are far less boring than being left with egg on your face, so consider these three as an antidote to the market froth.  

SOFTCAT

IT infrastructure business Softcat has surprised on the upside in recent months, increasing its profit guidance to analysts three times.

Big bubble: Some analysts fear the golden promise of AI is an illusion

Gross profits have risen steadily over the last five years and analysts expect the company to post operating profit of £174.2million for this year, rising to 188.9million in 2026.

Softcat reported an operating profit of £154.1 million last year.

The shares, though, have drifted down from a £19 or so high in the summer to under £16, which gives investors an opportunity to snap them up a little more cheaply.

The company helps its customers – small and medium-sized businesses and government departments – work out what technology they need and then sources everything for them.

That ranges from mobile devices and tablets to remote ‘cloud’ computing devices and security packages. Providing this service means little investment in inventory and plenty of cash generated.

Rebecca Maclean, who manages Dunedin Income Growth Trust for fund manager Aberdeen, is a fan, pointing to the lack of debt on the balance sheet as a protection against the high borrowing costs that are strangling some of Softcat’s rivals.

Softcat is keen on returning cash to shareholders too, which is good news for income seekers, though it currently yields under 2 per cent.

Traded on: Main Market Ticker: SCT Contact: www.softcat.com

RELX

It started life as a paper mill, but Relx is now into its digital era.

The FTSE 100 information giant reports its print activities separately from its other businesses, splitting out the old from the new.

The most recent figures from the company illustrate why that’s wise. While print revenues fell 21 per cent, the company’s underlying revenues rose 4 per cent and dividends were 7 per cent when print was stripped out.

The world’s scientists, lawyers and insurers rely on Relx’s publications and tools to discover fraud, publish and research scientific breakthroughs and process legal documents. Relx’s customers are loyal and there isn’t much competition in its niche markets. More than 80 per cent of its revenues are from repeat subscriptions and although the dividend yield is only 2 per cent, Relx has been ambitious with payouts, so customers could be in for a pleasant surprise.

The company also has an AI component, with many of the tools it offers being underpinned by artificial intelligence.

Unlike other stocks though, it hasn’t benefitted from the AI boom, with investors being cautious that other AI innovations could gobble up Relx’s market share and allow clients to replicate Relx’s offerings in-house for free.

Recent figures suggest that hasn’t been the case so far. The shares are down nearly 6 per cent YTD, so it’s a buying opportunity.

Traded on: Main Market Ticker: REL Contact: www.relx.com/investors

ASTRAZENECA

Rich or poor, we’ll still be in need of medicines, which is good news for healthcare giant AstraZeneca.

The company put the cat among the pigeons this week by announcing it was going to list in the US as well as the UK, but the good news is that will allow it greater visibility and help get the funding it needs.

Like all drug developers, Astra’s success is heavily linked to its pipeline of new medicines. Some will fail and some succeed, but at the moment AZ has a particularly strong cancer pipeline, which gives investors hope for the future.

AZ is a major exporter, generating around £10.9 billion in sales to global markets from the UK in 2023. That represents about 2.8 per cent of all this country’s exports.

Not surprisingly Jason Holland, at investment platform BestInvest, says that Astra scores highly on its profitability and margins. ‘It is a solid business,’ he says.

Trump’s tariffs have caused huge uncertainty for pharma stocks, and 40 per cent of AZ’s revenue came from North America last year, so this is a concern. However, chief executive Pascal Soriot has pledged $50 billion to manufacturing in the US, to smooth things over.

A delay to pharmaceutical tariffs and a deal with Pfizer cured a lot of the uncertainty that has weighed on AZ’s shares and they leapt a remarkable 9.6 per cent in a single day.

That still puts them up 5.53 per cent on last year, suggesting they might have further to go.

Traded on: Main Market Ticker: AZN Contact: www.astrazeneca.co.uk

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