Defensive Plays in Uncertain Times: Telecom Plus and Bunzl Offer Resilience and Growth

Amid geopolitical tensions, volatile energy markets, and the lingering specter of Fed rate cuts, investors are increasingly drawn to defensive stocks that offer stability and predictable returns. Two companies—Telecom Plus PLC (LON:TMCP) and Bunzl PLC (LON:BUNL)—stand out as exemplars of resilience, leveraging unique business models and strategic moves to thrive in turbulent conditions. For conservative investors seeking shelter from macroeconomic storms, these firms present compelling opportunities.

Telecom Plus: A Subscription Fortress in a Volatile World

Telecom Plus, trading as Utility Warehouse, has built a defensive moat around its multi-service subscription model. By bundling energy, broadband, mobile, and insurance under a single account, the company reduces customer churn and creates recurring revenue streams. Its Partner network—now 71,710 strong—fuels organic growth through word-of-mouth referrals, a low-cost acquisition strategy that thrives even as energy prices stabilize.

Key defensive advantages:
1. Immunity to Rate Cycles: Telecom Plus' subscription model shields it from energy price volatility. Even as Ofgem's price cap drops, its "Price Pledge" guarantees savings for multi-service customers, ensuring loyalty.
2. Dividend Discipline: With a 13.3% dividend hike to 94p per share in FY2025 and a 32-year history of dividend growth, the stock offers a 4.5% yield—a rare combination of income and stability.
3. Scalability: The company aims to double its customer base to 2 million, capitalizing on untapped markets like insurance and full-fiber broadband partnerships.

Bunzl: Acquisitions as an Engine of Resilience

Bunzl, a global distributor of essential products, has long relied on acquisition-driven growth to offset macroeconomic headwinds. Its 2024 acquisitions—including Comodis in France and C&C Group in the UK—added £286 million in annual revenue, boosting margins despite deflationary pressures. While 2025 has brought operational challenges in North America, the company's cash-generative model (93% cash conversion) and disciplined balance sheet (net debt at 1.1x EBITDA) provide a cushion for recovery.

Why Bunzl is a defensive bet:
1. Margin Resilience: Despite a projected dip to 7.0% in H1 2025, Bunzl's 8.3% operating margin in 2024 underscores its ability to control costs and extract synergies from acquisitions.
2. Essential Product Mix: Foodservice, healthcare, and industrial supplies are recession-resistant sectors where Bunzl dominates. Its Solupack acquisition in Brazil further strengthens its hold on packaging—a critical input for global supply chains.
3. Active Pipeline: With £700 million allocated annually for acquisitions through 2027, Bunzl is poised to capitalize on undervalued assets in stressed markets.

Why These Stocks Excel in Uncertain Markets

Both companies exemplify defensive investing principles:
- Telecom Plus offers low sensitivity to macro cycles, predictable cash flows, and a dividend that outpaces inflation. Its Partner network and multi-service bundling create a flywheel effect, insulating it from interest rate hikes or recessions.
- Bunzl thrives on acquisition compounding, a strategy that accelerates growth while its diversified portfolio shields it from regional downturns. Even in 2025's soft patch, its balance sheet and pipeline position it to rebound.

Risks and Considerations

No investment is risk-free. Telecom Plus faces competition from energy giants like SSE, while Bunzl must navigate execution risks in North America. However, both companies' capital allocation discipline—Telecom Plus returning 87% of profits to shareholders, Bunzl maintaining low leverage—mitigates these risks.

Investment Thesis: Buy Telecom Plus for Income, Bunzl for Growth

• Telecom Plus is a core holding for income-focused portfolios. Its 4.5% yield, dividend growth track record, and structural advantages in the UK utilities market make it a standout. A target price of £2,600 (per analyst estimates) suggests 25% upside from current levels.
• Bunzl is a selective opportunity for investors willing to endure short-term volatility. Its valuation at 14x forward P/E is reasonable given its cash flow and growth pipeline. The pause on share buybacks signals prudence, not weakness.

Conclusion: Safe Havens in a Stormy Sea

In an era of geopolitical uncertainty and potential Fed rate cuts, Telecom Plus and Bunzl offer distinct yet complementary defenses. Telecom Plus's subscription model and dividends provide ballast, while Bunzl's acquisition engine positions it to seize undervalued opportunities. Both are conservative investors' darlings—stocks to hold through market turbulence, not trade for quick gains.

For portfolios needing stability, these two firms are not just stocks but strategies—proving that resilience, when built into the business model, can turn uncertainty into advantage.