Top ‘tin hat’ stocks for cautious investors
Professional investors are backing so-called ‘tin hat’ stocks – companies that should do well against even the most volatile macro economic backdrop. We look at four of their favourites


With Bloomberg projecting a $2 trillion hit to global GDP from Trump’s tariffs by 2027, some fund managers believe investors are underestimating the long-term drag from protectionism and geopolitics. Yet there is a certain type of company that could thrive regardless.
Despite markets touching all-time highs, anecdotally a number of fund managers are quietly holding big cash positions – a classic sign of nervousness. Darius McDermott, managing director at fund research firm FundCalibre, said that while markets may be hitting new levels, so is uncertainty when it comes to how to invest.
“That combination warrants caution. The long-term fallout from Trump-era tariffs is still playing out, disrupting supply chains and damaging confidence in the US as a dependable investment partner. As global alliances shift, the winners of the next decade may look very different from the last,” he said.
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So where should cautious investors turn? McDermott is seeing demand rising for funds and assets that are boring but dependable, so-called ‘tin hat stocks’ – resilient, low-correlation companies that managers believe will do well irrespective of the wider macro volatility.
MoneyWeek asked a selection of fund managers to pick their favourite ‘tin hat’ stocks for wary investors and uncertain times.
We look at the best investment platforms in a separate article.
Stocks to buy when growth slows
1. Michelin
One type of company to look for when the outlook is mixed are those with durable competitive advantages in niche, recurring-demand markets. Like Michelin.
Daniel Avigad, fund manager of the Lansdowne Partners European Special Situations Strategy, explained why he is invested in the tyre maker.
“Tyres are a recurring demand product, meaning that regardless of where we are in the economic cycle, vehicle owners require replacements, creating more stable revenue,” he said.
Michelin stands out for its brand strength, global scale and its technology leadership, he added: “It has pioneered nearly all major tyre innovations of the past century, and consistently invests 1.5 to six times more in research and development (R&D) than competitors.”
Stringent regulatory standards and the rise of electric vehicles – which require tyres with enhanced safety, durability, and energy efficiency due to their increased weight – have further reinforced the importance of R&D.
“That innovation enables premium pricing power, helping the company offset input cost inflation and defend margins. Michelin embodies key characteristics that we value in a good business,” said Avigad.
2. Republic Services
We all need essential services like water and waste, making them among the most defensive areas of the market. With long-term demand and secure prices for their services, these businesses operate largely at a local level, making them far less exposed to tariffs or geopolitical disruption.
Saurabh Sharma, fund manager of the Regnan Sustainable Water and Waste strategy, is invested in one example – Republic Services (RSG), a provider of non-hazardous solid-waste management and recycling services in the US.
“The company’s recurring business model provides stable revenue streams, fostering resilience to economic downturns,” said Sharma, adding RSG offers mid-single-digit organic growth along with contributions from acquisitions.
Investments in advanced recycling and landfill gas-to-energy projects reinforce RSG’s leadership in sustainability and technology.
“With strong free cash flow, disciplined capital allocation and a prudent dividend policy, RSG balances shareholders’ returns with reinvestment in innovation and operational efficiency,” Sharma said.
The stock is also enjoying a rerating, an increase in its share price that suggests a positive shift in the market’s perception of the company's future prospects.
3. MHA
MHA is a UK accounting services business. It generates 85%+ recurring revenues from audit and tax services, which are critical for the businesses it provides these services to, creating stable demand. It operates in a strong market where pricing, regulatory change, cross-selling and consolidation underpin its multi-year growth.
Brendan Gulston, co-manager of the WS Gresham House UK Multi Cap Income fund, is a fan of MHA for its high profitability and cash generation, which it uses to improve its operations using tech, automation and offshoring.
Gulston invested as part of MHA’s IPO earlier this year, when the business was valued at a single digit enterprise value to EBITDA multiple, “representing a significant discount to private equity transactions at low to mid-teens multiples”, he said.
“High quality recurring revenues, structural organic growth drivers, high margins and cash generation, robust net cash balance sheet and an undemanding valuation” provide a compelling case for MHA, said Gulston.
He also liked the fact MHA looks like it has the option to make further acquisitions that can be bolted on to the platform.
4. L’Oreal
L’Oreal has a lot to recommend itself – an unmatched portfolio of brands across categories, price points and geographies, big investments in marketing and product development backed by a gross profit margin of over 70%, and an excellent track record.
Rob Strachan, deputy portfolio manager of the Evenlode Global Income fund, is invested in the beauty giant for its ‘lipstick effect’ – in times of economic stress, like now, the company benefits literally and figuratively.
“Consumers cut back on large discretionary spending but increase spending on small, affordable treats as a much-needed boost to morale,” Strachan explained, adding while revenue growth has recently been curbed, L’Oreal remains resilient due to a general consumer slowdown driven by inflation and higher interest rates.
Longer-term, the company should benefit from aging populations’ increasing demand to look younger, growth in underpenetrated markets like India and the shift to science-based, more complex beauty products and routines, he pointed out.
“Male beauty is also a big opportunity – as I can attest to, there is a lot of room for men to be more attentive to the finer points of their appearance,” Strachan said.
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Laura Miller is an experienced financial and business journalist. Formerly on staff at the Daily Telegraph, her freelance work now appears in the money pages of all the national newspapers. She endeavours to make money issues easy to understand for everyone, and to do justice to the people who regularly trust her to tell their stories. She lives by the sea in Aberystwyth. You can find her tweeting @thatlaurawrites