Given the high level of volatility sweeping across global markets in recent weeks, investors need to ensure their portfolios are dominated by companies built to withstand even the strongest economic headwinds.
While there are many Australian companies which are perfectly capable of enduring these tough times, there are far fewer who can actually claim to emerge stronger than they were before. Burson Group Ltd (ASX: BAP) is an exception to this rule.
Burson Group is Australia's leading automotive aftermarket parts business. It provides replacement parts and consumables that are used in the servicing and repairs of used vehicles.
This has proven to be a very durable industry in years gone by. This is because when individuals become increasingly concerned about the economy (and the risk of losing employment, not being able to pay their bills or look after their families), they tend to hold onto their older vehicles for longer. Clearly, this increases the need for services and replacements for old, faulty parts, bolstering the demand for Burson's products.
As a welcome addition, Burson can typically increase the prices it charges on these goods without too much impact to demand. This has resulted in a considerable improvement in the company's already rock-solid margins – a trend I expect will continue over the coming years.
Burson Group is quickly expanding its footprint as well. It recently opened its first stores in the Western Australia market while it also acquired the automotive division of Metcash Limited (ASX: MTS), adding brands such as Autobarn, ABS and Midas to its portfolio for a very reasonable price.
Regardless of whether or not the Australian (or global) economy is set for a major shakeup in the near future, Burson Group could be an excellent addition to your portfolio today. In large part, this depends on the company's ability – and discipline – to maintain its composure so as to not overpay for new stores or businesses, while it also depends on CEO Darryl Abotomey's continued leadership.
Although the shares are trading near an all-time high of $3.69 – up 4.5% for the day – they could still generate outstanding returns for investors over the long-run.
