Low-Volatility Stocks Are Appealing in Volatile Market Conditions
Whenever the market enters into correction territory, it’s incredibly important to review your portfolio and determine if any adjustments need to be made. That’s because we simply can’t predict how long the selling pressure will persist and which sectors of the market will be most vulnerable to the downside. Just look at what’s occurring in the growth space for a quick reminder of how quickly risk can happen in the stock market.
Pretty much every equity will face selling pressure during extreme market volatility, yet there are certain stocks that tend to hold up better due to the nature of their businesses and low beta values. As a reminder, a stock with a beta value under 1 indicates a stock with lower volatility than the broader market. While it’s true that there simply isn’t a stock that is 100% risk-free, focusing on companies that are perceived to be low-risk and in good financial standing can be a very savvy strategy during corrections.
Here are 3 safe stocks to buy in a dangerous market:
The Hershey Company (NYSE: HSY)
What could be sweeter than owning a dividend-paying global confectionery leader known for its chocolate, sweets, mints, gum, and other snacks? The Hershey Company has been holding up very well during the recent selloff, which is all the more impressive considering that the stock is trading around all-time highs. With a beta value of 0.38 and plenty of positive momentum working in the company’s favor, this is certainly an intriguing name to consider if you are interested in putting capital to work at this time.
Hershey announced several pricing increases in 2021 that should lead to impressive earnings this year, and the company’s 90+ brands see steady global demand regardless of what is occurring in the economy. The company also acquired Dot’s Pretzels and Pretzels Inc. for a combined $1.2 billion, with the former being the fastest-growing U.S. pretzel brand. The move expands Hershey’s snack food portfolio and will help Hershey
manufacture pretzels in-house, which are both strong positives to consider. The 1.8% dividend yield is also a plus here, as investors are clearly favoring income-generating assets to start the year.
Duke Realty Corp (NYSE: DRE)
Although this REIT has pulled back a bit from recent highs, it’s still a relatively safe pick to consider for the long-term thanks to the company’s diversified portfolio of industrial, office and retail properties. Duke Realty owns approximately 500 logistics properties, which means the company is nicely positioned to continue benefitting from the rise of e-commerce over the years. The company’s management also increased its guidance last quarter, which means a strong Q4 could be on the cards when Duke Realty reports earnings on January 27th.
It’s also worth mentioning that as of September 30th, Duke Realty had $1.1 billion of projects in development, which is a sign that this REIT is firing on all cylinders and aggressively targeting ways to grow its customer base. Duke also has a young portfolio of properties in key markets across the country, which means the company can lease its properties for higher rates than its peers. The bottom line here is that Duke Realty is a high-quality REIT
offering a 1.94% dividend yield and an attractive entry point after pulling back from highs, so keep it in mind if you’re interested in putting some money to work.
Colgate-Palmolive (NYSE: CL)
Sure, the idea of owning a household and consumer products company isn’t as exciting as the prospects of buying an innovative tech company. However, you’ll be happy to have a reliable company like Colgate-Palmolive
in your portfolio when volatility is on the rise. Colgate-Palmolive has been in business since 1806 and owns iconic brands like Colgate, Palmolive, Irish Spring, Fab, Softsoap, and more. It’s considered a “safe” pick thanks to the company’s consistent earnings and long history of dividend increases, which is certainly appealing in today’s market.
Colgate-Palmolive is actually a dividend aristocrat, meaning that the company has boosted its annual payout for over 25 consecutive years. It’s also an interesting pick at this time thanks to the company’s exposure to the pet industry, with Colgate-Palmolive’s Hill’s Science Diet Pet Food contributing strong organic sales growth last quarter. Like many consumer staples companies, Colgate-Palmolive will have to deal with the impacts of inflation, but the company has a strong brand and the ability to increase prices to help lessen the blow. It’s exactly the type of stock to look at in a dangerous market environment.
Before you consider Colgate-Palmolive, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Colgate-Palmolive wasn't on the list.
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