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7 Stocks That Risk-Averse Investors Can Buy Now in 2020

7 Stocks That Risk-Averse Investors Can Buy NowPosted on Monday, May 4th, 2020 by MarketBeat Staff

If the title of this presentation piqued your interest, then you understand that there’s no such thing as risk-free investing. And that’s particularly true when you’re investing in stocks. The truth is sometimes the best thing that can happen is that your portfolio performs less badly than the market.

The goal of the risk-averse investor is not to avoid stocks, it’s to ensure that you retain the capital you gain, even if that means your portfolio does not grow as fast or as far as more aggressive stocks. You have to have a very low FOMO (fear of missing out) level.

With that in mind, there are still ways you can profit from this market without throwing caution to the wind. One is to look for stocks that have a low beta. Beta is a measure of a stock’s volatility in comparison to the rest of the market. A stock with a beta of 1, for example, means that investors can expect the price movement of the stock to be closely correlated to the market. A beta of more than 1 means the stock price will be more volatile (higher highs but lower lows).

What you’re looking for is a beta of less than 1. This means that the stock is less volatile than the broader market. While this may mean lower highs, it also generally means lower lows.

And many of these stocks are in defensive sectors. This means that their performance is consistent under both good and bad economic conditions.

#1 - J.M. Smucker (NYSE:SJM)

J M Smucker logo

J.M. Smucker (SJM) - Beta: 0.14 - Dividend Yield: 3.08%

In the good old days of February 2020, J.M. Smucker (NYSE:SJM) would have been considered a solid defensive stock. And there was nothing in the company’s first-quarter earnings report to dispute that. On February 26, 2020 the company reported earnings that exceeded analysts’ expectations. And although revenue was slightly down on a year-over-year basis, it was largely in-line with the analysts.

However, with the overlay of a global pandemic that is putting millions of Americans under extended shelter-in-place orders, the maker of consumer staples stands to benefit more than most. Although generic equivalents exist for many of the company’s products, consumers tend to be brand loyal, particularly when they are limiting their shopping trips and they know they may have to stock up on staples.

To that end, the company raised its guidance for the second quarter which includes March and April. And even as the economy begins to re-open, the reality for many Americans will still revolve around more eating at home. And that bodes well for investors in SJM stock. The company is also a rock-solid dividend play that has delivered over 18 consecutive years of dividend growth.

About J M Smucker
The J. M. Smucker Co. engages in the manufacture and marketing of branded food and beverage products. It operates through the following segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and International and Away From Home. The U. S. Retail Coffee segment includes the domestic sales of Folgers, Dunkin Donuts, and Cafe Bustelo branded coffee. The U.S. Retail Consumer Foods segment sells Jif, Smucker's, Crisco, and Pillsbury branded products. he U.S. Retail Pet Foods comprises of Meow Mix, Milk-Bone, Natural Balance, Kibbles'n Bits, 9Lives, Pup-Peroni, and Nature's Recipe branded products. The International and Foodservice segment covers the products distributed outside of the U.S. retail market. The company was founded by Jerome Monroe Smucker in 1897 and is headquartered in Orrville, OH.

Current Price: $110.11
Consensus Rating: Hold
Ratings Breakdown: 1 Buy Ratings, 10 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $115.08 (4.5% Upside)



#2 - Campbell Soup (NYSE:CPB)

Campbell Soup logo

Campbell Soup (CPB)- Beta: 0.14- Dividend Yield: 3.08%

We’re heading out of the traditional “soup season”, but Campbell Soup (NYSE:CPB) is still a good investment in the consumer staples sector. Initially, the stock popped as consumers stocked up on soup. But the company has a portfolio of brands that go well beyond soup. Goldfish brand crackers, Pepperidge farm cookies, and Swanson frozen meals are just a few examples.

And the company’s supply chain is largely located in the United States. This means that customers should be able to find the company’s products when they shop online or at the store.

I ask you to consider this. As the calendar turns to June, kids would be home from school anyway. If your household is anything like mine then you know that the demand for snack foods increases in proportion to the number of children in my house. So whether we’re all still staying home or not, there is a need for the company’s products.

Some will argue that Campbell’s Soup has been a market laggard, but for investors who have held the stock for over five years have a gain of over 10%. And they get a nice dividend for the down times.

About Campbell Soup
Campbell Soup Company, together with its subsidiaries, manufactures and markets branded food and beverage products. It operates through three segments: Americas Simple Meals and Beverages, Global Biscuits and Snacks, and Campbell Fresh. The Americas Simple Meals and Beverages segment engages in the retail and food service of Campbell's condensed and ready-to-serve soups; Swanson broth and stocks; Prego pasta sauces; Pace Mexican sauces; Campbell's gravies, pastas, beans, and dinner sauces; Swanson canned poultry products; Plum food and snack products; V8 juices and beverages; Campbell's tomato juices; and Pacific broth, soups, non-dairy beverages, and other simple meals. The Global Biscuits and Snacks segment offers Pepperidge Farm cookies, crackers, and bakery and frozen products in the United States retail; and Snyder's-Lance pretzels, sandwich crackers, potato chips, tortilla chips, and other snacking products in the United States and Europe. It also provides Arnott's biscuits in Australia and the Asia Pacific; Kelsen cookies worldwide; simple meals and shelf-stable beverages in Australia, the Asia Pacific, and Latin America. The Campbell Fresh segment offers Bolthouse Farms fresh carrots, carrot ingredients, refrigerated beverages, and refrigerated salad dressings; Garden Fresh Gourmet salsa, hummus, dips, and tortilla chips; and refrigerated soups in the Unites States. The company sells its products through retail food chains, mass discounters, mass merchandisers, club stores, convenience stores, drug stores, and dollar stores, as well as e-commerce and other retail, commercial, and non-commercial establishments; and independent contractor distributors. Campbell Soup Company was founded in 1869 and is headquartered in Camden, New Jersey.

Current Price: $48.66
Consensus Rating: Hold
Ratings Breakdown: 3 Buy Ratings, 9 Hold Ratings, 4 Sell Ratings.
Consensus Price Target: $50.00 (2.8% Upside)



#3 - Walmart (NYSE:WMT)

Walmart logo

Walmart (WMT)- Beta: 0.27 - Dividend Yield: 1.75%

Would you be surprised if I told you that Walmart (NYSE:WMT) may be a better investment at the moment than Amazon (NASDAQ:AMZN)? Amazon is a strong, well-run company and its stock will probably be moving much higher. However, Amazon continues to invest most, if not all, of their earnings back into their business. The company’s current initiative is designed to help the company better protect workers, and ultimately customers, in response to the Covid-19 pandemic.

In the past, that would have received a thumbs up from shareholders. But for now at least, Amazon stock took a dip. Meanwhile, despite missing on both revenue and earnings per share (EPS) in its latest earnings report, Walmart stock is showing a slight gain in 2020. One of the reasons, of course, is that the company is regarded as an essential business. But Walmart has taken huge strides in embracing the omnichannel model that Amazon continues to perfect. With customers having multiple options for ordering and receiving the merchandise they purchase, the company is showing to be an even stronger defensive stock than they were before. And Walmart offers a consistent, secure dividend that the company has increased for the last 45 consecutive years.

About Walmart
Walmart Inc. engages in the retail and wholesale operations in various formats worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, drugstores, and convenience stores; membership-only warehouse clubs; e-commerce Websites, such as walmart.com, jet.com, shoes.com, and samsclub.com; and mobile commerce applications. The company offers grocery products, including meat, produce, natural and organics, deli and bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables, such as health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; and health and wellness products. It also provides electronics, cameras and supplies, photo processing services, wireless, movies, music, video games, and books; stationery, automotive, hardware and paint, sporting goods, and outdoor living and horticulture; apparel for women, girls, men, boys, and infants, as well as shoes, jewelry, and accessories; and home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics, crafts, and seasonal merchandise, as well as brand name merchandise. In addition, the company offers fuel and financial services and related products, including money orders, prepaid cards, wire and money transfers, check cashing, and bill payment. It operates approximately 11,300 stores and various e-commerce Websites under the 58 banners in 27 countries. The company was formerly known as Wal-Mart Stores, Inc. and changed its name to Walmart Inc. in February 2018. Walmart Inc. was founded in 1945 and is based in Bentonville, Arkansas.

Current Price: $122.48
Consensus Rating: Buy
Ratings Breakdown: 23 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $132.09 (7.8% Upside)



#4 - Kroger (NYSE:KR)

Kroger logo

Kroger (KR)-Beta: 0.36- Dividend Yield: 2.03%

Kroger (NYSE:KR) has recently become a Warren Buffett stock. Berkshire Hathaway (BRK:B) purchased nearly 19 million shares of the grocery chain. Berkshire’s stake at the time was $549 million which means that Buffett owns more than 2.4% of the company’s outstanding shares.

I could leave this argument with just saying that Berkshire does not typically invest in companies that he doesn’t believe in. But there are more reasons to like Kroger as a conservative investment. The company last reported earnings on March 5, 2020. The report was great. And one thing to note was, at the time, the company did not adjust its guidance in the wake of the coronavirus. This was before much of the nation was asked and/or mandated to stay at home.

Kroger is making successful inroads in the digital grocery movement. An interesting initiative that Kroger is examining is a partnership with Microsoft (NASDAQ:MSFT) to experiment with digital store displays. They are also partnering with Walgreens Boots Alliance (NYSE:WBA) to have stores within each other’s stores. The company is also looking into autonomous delivery vehicles in Houston.

Kroger has a solid dividend history and has increased its dividend for the last 11 consecutive years.

About Kroger
The Kroger Co. operates as a retailer in the United States. The company operates supermarkets, multi-department stores, marketplace stores, and price impact warehouse stores. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys. The company's marketplace stores offer full-service grocery, pharmacy, health and beauty care departments, and perishable goods, as well as general merchandise, including apparel, home goods, and toys; and price impact warehouse stores provides grocery, and health and beauty care items, as well as meat, dairy, baked goods, and fresh produce items. It also manufactures and processes food products for sale in its supermarkets; and sells fuel through 1,537 fuel centers. As of March 7, 2019, the company operated 2,764 retail food stores under various banner names, as well as an online retail store. The Kroger Co. was founded in 1883 and is based in Cincinnati, Ohio.

Current Price: $33.28
Consensus Rating: Hold
Ratings Breakdown: 10 Buy Ratings, 11 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $33.19 (-0.3% Upside)



#5 - Merck (NYSE:MRK)

Merck & Co., Inc. logo

Merck (MRK)-Beta: 0.55-Dividend Yield: 3.02%

Biopharmaceutical companies are among the most volatile stocks in the broader healthcare sector. While Merck (NYSE:MRK) may not be on the front line of the race to a treatment for the novel coronavirus, they are lending their support in important ways.

A number of companies that is too long to list are working on treatments for the novel coronavirus. One of the risks that are involved with investing in these stocks is that they are frequently traded on the news. That’s why a stock like Gilead Sciences (NASDAQ:GILD) soared upwards on hopeful news of their drug remdesivir and its effectiveness in potentially shortening the recovery time of infected patients.

However, what goes up can come down. And investors with a queasy stomach need not invest in GILD stock as the price has moved up and down with every piece of news good or bad.

Which brings us back to Merck and its signature cancer drug, Keytruda. On April 28, the company received accelerated approval to launch a new treatment schedule for Keytruda. This drug generated $11.1 billion in sales for the company last year. That’s over 50% more than its nearest competitor.

While all the focus is on the novel coronavirus, diseases like cancer are not going away. And that means that for investors looking for stocks with long-term stability, Merck is a solid choice.

About Merck & Co., Inc.
Merck & Co., Inc. provides healthcare solutions worldwide. It operates through four segments: Pharmaceutical, Animal Health, Healthcare Services, and Alliances. The company offers therapeutic and preventive agents to treat cardiovascular, type 2 diabetes, chronic hepatitis C virus, HIV-1 infection, intra-abdominal, fungal infection, insomnia, and inflammatory diseases. It also provides neuromuscular blocking agents; cholesterol modifying medicines; and anti-bacterial and vaginal contraceptive products. In addition, the company offers products to prevent chemotherapy-induced and post-operative nausea and vomiting; treat non-small-cell lung, ovarian and breast, thyroid, and cervical cancer, as well as brain tumors; and prevent diseases caused by human papillomavirus, as well as offers vaccines for measles, mumps, rubella, varicella, shingles, rotavirus gastroenteritis, and pneumococcal diseases. Further, it provides antibiotic and anti-inflammatory drugs to treat infectious and respiratory diseases, fertility disorders, and pneumonia in cattle, bovine, and swine; vaccines for poultry; parasiticide for sea lice in salmon; and antibiotics and vaccines for fishes. Additionally, the company offers companion animal products, such as ointments; diabetes mellitus treatment and anthelmintic products; products to treat fleas and ticks in dogs and cats; fertility management products for horses; vaccines for dogs, cats, and horses; and products for protection against bites from fleas, ticks, mosquitoes, and sandflies. It has collaborations with AstraZeneca PLC; Bayer AG; and Eisai Co., Ltd. The company serves drug wholesalers and retailers, hospitals, government agencies and entities, physicians, distributors, veterinarians, animal producers, and managed health care providers. Merck & Co., Inc. was founded in 1891 and is headquartered in Kenilworth, New Jersey.

Current Price: $77.55
Consensus Rating: Buy
Ratings Breakdown: 12 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $93.60 (20.7% Upside)



#6 - Duke Energy (NYSE:DUK)

Duke Energy logo

Duke Energy (DUK) - Beta: 0.33 - Dividend Yield: 4.36%

For those investors unfamiliar with Duke Energy (NYSE:DUK), don’t let the name confuse you. DUK is a utility company. And utility stocks are among the most solid performers in any economic condition. They really are the definition of a defensive stock. Investors won’t get meteoric capital growth, but they are protected against the downside risk because of prices that are regulated.

Still, utility companies aren’t without risk. Size matters. And Duke is one of the largest companies with approximately 7.7 million retail electric customers that stretch across six states. To complement that, the company also distributes natural gas to over 1.6 million customers across several states. The regions that the company operates in are defined by solid demographics which means that the population remains fairly stable.

And Simply Safe Dividends consistently ranks Duke Energy as one of the best recession-proof stocks. It has delivered a dividend for over 90 years. And for the last 13 years, it has increased its dividend. The company reports earnings on May 12, 2020. Investors should pay attention to the company’s forward guidance. Although utility usage should be going up as more people are staying home, you would expect the company to have a solid year.

About Duke Energy
Duke Energy Corp. engages in distribution of natural gas and energy related services. It operates through the following segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Commercial Renewables. The Electric Utilities and Infrastructure segment conducts operations primarily through the regulated public utilities of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Florida, Duke Energy Indiana and Duke Energy Ohio. The Gas Utilities and Infrastructure segment focuses on natural gas operations primarily through the regulated public utilities of Piedmont and Duke Energy Ohio. The Commercial Renewables segment acquires, develops, builds, operates, and owns wind and solar renewable generation throughout the continental United States. The company was founded in 1904 and is headquartered in Charlotte, NC.

Current Price: $83.72
Consensus Rating: Hold
Ratings Breakdown: 4 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $92.85 (10.9% Upside)



#7 - Verizon Communications (NYSE:VZ)

Verizon Communications logo

Verizon Communications (VZ)- Beta: 0.46- Dividend Yield: 4.23%

Like many wireless phone providers, Verizon (NYSE:VZ) is still awaiting the rollout of 5G technology. It will certainly provide a lift to wireless phone sales as customers look to upgrade to the latest and best. However for now, the company is experiencing soft sales as retail stores are closed. It’s fair to be concerned about Verizon only being a “pure-play” for wireless. The company does not really compete it the digital, streaming world.

But while streaming is all the rage, there may be some “streaming fatigue” that sets in once the stay at home orders are lifted.  That’s why you have to look beyond the pandemic to understand why Verizon is a good investment.

All things being equal, retail stores should be able to open fairly quickly with appropriate social distance and safety protocols. But even if the store openings take longer than expected, the company has rock solid free cash flow and should easily be able to weather the current storm. And while the stock is down for the year, the stock has paid a dividend for 30 consecutive years and has increased its dividend payment each of the last 15 years.

About Verizon Communications
Verizon Communications Inc., through its subsidiaries, offers communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company's Wireless segment provides wireless voice and data services; Internet access on various notebook computers and tablets; international travel wireless services; and network access services to deliver various Internet of Things products and services, as well as offers digital advertising and digital media services platforms. This segment also provides wireless devices, including smartphones and basic phones, wearables, and tablets and other Internet access devices. As of December 31, 2018, it had 118.0 million retail connections. Its Wireline segment offers traditional circuit-based network products and services; networking solutions, comprising private Internet protocol (IP), Ethernet, and software-defined wide area network, as well as cyber security services; local exchange, regional, long distance, and toll-free calling services; voice messaging and conferencing services; and workforce productivity and customer contact center solutions, as well as residential fixed connectivity solutions, including Internet, TV, and voice services under the Fios brand name. This segment also provides premises equipment, as well as installation, maintenance, and site services; data, voice, local dial tone, and broadband services primarily to local, long distance, and wireless carriers; voice and networking products, Fios services, IP networking, voice solutions, security, and managed information technology services for small and medium businesses, state and local governments, and educational institutions; and security and managed network services. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was founded in 1983 and is headquartered in New York, New York.

Current Price: $55.14
Consensus Rating: Hold
Ratings Breakdown: 7 Buy Ratings, 15 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $61.41 (11.4% Upside)

 

Even with a market that is proving to be amazingly resilient, the day-to-day movement of the market is enough to spook even aggressive investors. If you’re an investor who has a low-risk tolerance but want to stay in the market, it’s important to look at stocks that prove how slow and steady wins the race.

The novel coronavirus has created a situation unlike anything investors have seen in their lifetime. Not just businesses, but entire industries, have been shut down as our world responds to a global pandemic. Investors hate uncertainty, but the market is shrouded in uncertainty.

Many companies are refraining from releasing forward guidance for precisely that reason. Apple (NASDAQ:AAPL) CEO, Tim Allen, described trying to predict the rest of the year as driving without being able to see out your windshield.

The stocks that are presented in this presentation all have a beta value of less than 1. That means they tend to be less volatile than the broader market. And while that may not be the most exciting way to enjoy the market during a bull run, it will help you sleep better in more turbulent times.

6 Stocks That May Not Survive the Coronavirus

Companies that are in a shaky financial position may sometimes attract investors in a bull market. Traders seeking a short-term profit can often use an oversold condition to capture a quick gain. But in a bear market, these companies frequently are left on the sidelines.

But a declining stock price by itself should not be enough to scare investors off. What investors really need to pay attention to is the company’s ability to finance existing debt or take on additional debt. Companies with low credit ratings face the problem of having too much debt on their books and an inability to finance it at more favorable rates.

That’s one reason we’ve put together this presentation that highlights 6 companies that may not survive the coronavirus. These companies have low stock prices. In fact, many of them are, or will be, in danger of being delisted if they cannot bring their stock above the $1 threshold. And on top of that, these companies each carry credit ratings of CCC+ or lower and are at risk of seeing those ratings even go lower.

Each of the companies presented here are considered to be among the weakest, if not the weakest, in their sector. If you have any of these falling knives in your portfolio now is the time to cut your losses and walk away.

View the "6 Stocks That May Not Survive the Coronavirus" Here.






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