Four high-quality stocks for the long run

High-quality stocks with good cash flow, high returns on capital and low debt levels are cheaper than at any point in the last decade, says professional investor Hugh Yarrow. Here he picks four stocks capable of generating long-term shareholder value.

Each week, a professional investor tells MoneyWeek where he'd put his money now. This week:Hugh Yarrow, manager of the Evenlode Income Fund.

Riskier equities have outperformed strongly since the market bottomed in March, helped by huge monetary stimulus and a general sense that the economy has stabilised. Many highly indebted, cyclical stocks are pricing in a strong, sustained recovery that may or may not happen. However, plenty of defensive firms look good value, having lagged the market recovery. High-quality stocks with reliable cash flow, high returns on capital and low debt levels are at their cheapest, relative to low-quality stocks, than at any point in the last decade. Here are four capable of generating long-term shareholder value and trading on attractive cash flow and dividend yields.

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