During times of market volatility, investing in low beta stocks is a good strategy for risk-averse investors. Beta is a measure of how volatile a stock is compared to a particular index. In most cases this means the S&P 500. When a stock has a low beta (defined as being between 0 and 1), it will have smaller price swings than the index that it tracks.
In many cases, low beta stocks are found in mature, defensive industries. This means that the companies have products and/or services that are in demand no matter what is happening in the broader economy. This helps ensure that the companies generate positive and, hopefully growing, revenue and earnings. This in turn can serve as a catalyst for higher stock prices.
However, investing in low beta stocks doesn't mean that you have to sacrifice growth. Like any asset class, low beta stocks can by cyclical. The stocks on this list are stocks that appear to have upside in the first two quarters.
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- J.M. Smucker
- Newmont Gold
- Clorox
- General Mills
- Regeneron Pharmaceuticals
- Global Self Storage
- Tootsie Roll Industries
#1 - J.M. Smucker (NYSE:SJM)
The J.M. Smucker Company (NYSE: SJM) is a good example of what investors might expect from a low-beta stock. The stock is up 14% in the last 12 months as consumers have shifted towards pantry staples over discretionary spending. One reason is that the company continues to deliver solid revenue and earnings, even in the face of difficult comparisons to 2021.
The company’s 2023 fiscal year began in July, and the results are mixed. Revenue has come in higher than the prior year, but earnings are lagging. Looking through a broader lens, analysts expect low- to mid-growth revenue and earnings in the next five years. However, Smucker’s has a tasty dividend with a yield of 2.6%.
And perhaps more significantly SJM stock has a payout of $4.08 per share, a number that has been increasing for 24 years. This puts the company on the cusp of being a dividend aristocrat and a great reason to add it to a low-risk portfolio of stocks.
About J. M. Smucker
The J. M. Smucker Company manufactures and markets branded food and beverage products worldwide. It operates in three segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The company offers mainstream roast, ground, single serve, and premium coffee; peanut butter and specialty spreads; fruit spreads, toppings, and syrups; jelly products; nut mix products; shortening and oils; frozen sandwiches and snacks; pet food and pet snacks; and foodservice hot beverage, foodservice portion control, and flour products, as well as dog and cat food, frozen handheld products, juices and beverages, and baking mixes and ingredients.
Read More - Current Price
- $112.04
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $127.09 (13.4% Upside)
#2 - Newmont Gold (NYSE:NEM)
It’s been difficult to get a fix on the price of gold in the past 12 months. Despite being an inflation hedge, precious metals of all types have largely been running in place. That includes mining stocks like Newmont Corporation (NYSE: NEM). NEM stock is down 23% for the year, making it a laggard compared to the S&P 500.
Nevertheless, if you’re looking for low-beta stocks to add to your portfolio, NEM stock is worth a close look. For starters, it’s the world’s largest gold miner. Revenue and earnings are likely to be flat over the next five years, but you’re investing in a stock like Newmont for the consistency of its dividend, which currently has a yield of over 4%.
And when it comes to Newmont and other mining stocks, the stock price is usually driven by demand for gold. As of this writing, the supply of gold was up a little above 1% for the year. However, at the end of the third quarter, demand was up 18% for the year, putting it back at pre-pandemic levels. This supply-demand imbalance may continue as central banks make moves to increase their gold supplies in the face of sticky inflation.
About Newmont
Newmont Corporation engages in the production and exploration of gold. It also explores for copper, silver, zinc, and lead. The company has operations and/or assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, Papua New Guinea, Ecuador, Fiji, and Ghana.
Read More - Current Price
- $42.99
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $54.85 (27.6% Upside)
#3 - Clorox (NYSE:CLX)
The Clorox Company (NYSE: CLX) was one of the biggest pandemic winners. CLX stock soared as consumers snapped up their cleaning solutions to keep their homes and businesses as safe as possible. However, 2022 has been a different story. CLX stock is down 17% for the year, which is about on par with the broader market.
It’s all about earnings. The company’s revenue continues to come in above pre-pandemic levels. But earnings are lagging. This suggests that the company may have difficulty passing along its higher costs. However, as inflation pressures are expected to ease in the next five years, analysts expect the company to grow earnings at an 18% pace.
Analysts tracked by MarketBeat advise investors to reduce their position in CLX stock. However, at least five analysts have boosted their price target in the last several months. Plus, with Clorox, you get another dividend aristocrat. The company has increased its dividend for 35 years and currently pays out $4.72 per share.
About Clorox
The Clorox Company manufactures and markets consumer and professional products worldwide. It operates through four segments: Health and Wellness, Household, Lifestyle, and International. The Health and Wellness segment offers cleaning products, such as laundry additives and home care products primarily under the Clorox, Clorox2, Scentiva, Pine-Sol, Liquid-Plumr, Tilex, and Formula 409 brands; professional cleaning and disinfecting products under the CloroxPro and Clorox Healthcare brands; professional food service products under the Hidden Valley brand; and vitamins, minerals and supplement products under the RenewLife, Natural Vitality, NeoCell, and Rainbow Light brands in the United States.
Read More - Current Price
- $168.05
- Consensus Rating
- Reduce
- Ratings Breakdown
- 1 Buy Ratings, 9 Hold Ratings, 5 Sell Ratings.
- Consensus Price Target
- $155.00 (7.8% Downside)
#4 - General Mills (NYSE:GIS)
In the face of inflationary pressure, General Mills, Inc. (NYSE: GIS) has been an example of what happens when an irresistible force means an immovable object. GIS stock has plowed 28% higher in the last 12 months. This shows the pricing power that the company has in its portfolio of consumer staples.
As of this writing, analysts expected the company to deliver another solid earnings report. General Mills was expected to post earnings of $1.06 per share on revenue of $5.19 billion. Both numbers would be higher on a year-over-year basis. When the company last reported earnings, it raised its full-year guidance for revenue and earnings per share (EPS). Analysts will be hoping to hear a confirmation of that guidance going forward.
Analysts expect the company to post low single-digit growth in both revenue and earnings over the next five years. However, the company’s above-average profit margin should keep investors satisfied. This is particularly the case when the company has a dividend with room to expand.
About General Mills
General Mills, Inc manufactures and markets branded consumer foods worldwide. The company operates through four segments: North America Retail; International; Pet; and North America Foodservice. It offers grain, ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, bakery flour, frozen pizza and pizza snacks, snack bars, fruit and savory snacks, ice cream and frozen desserts, unbaked and fully baked frozen dough products, frozen hot snacks, ethnic meals, side dish mixes, frozen breakfast and entrees, nutrition bars, and frozen and shelf-stable vegetables.
Read More - Current Price
- $63.80
- Consensus Rating
- Hold
- Ratings Breakdown
- 3 Buy Ratings, 12 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $72.67 (13.9% Upside)
#5 - Regeneron Pharmaceuticals (NASDAQ:REGN)
In terms of share price, Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) is the most expensive stock on this list of low-beta stocks. But that doesn’t mean that it doesn’t deserve your consideration. Although it has several products that are commercially available, many investors may not have been familiar with the company until it made headlines for its monoclonal antibody to treat Covid-19.
However, when it comes to companies like Regeneron, it all comes down to the pipeline. Regeneron has an extensive pipeline including many candidates currently in Phase 3 trials. And among those in early-stage trials is NTLA-2001 which the company is co-developing with Intellia Therapeutics, Inc. (NASDAQ: NTLA) using the CRISPR-Cas9 genome editing technology.
Regeneron does not issue a dividend which may be enough to keep some investors away. However, REGN stock has grown over 16% in the last 12 months, and analysts still see some upside ahead.
About Regeneron Pharmaceuticals
Regeneron Pharmaceuticals, Inc discovers, invents, develops, manufactures, and commercializes medicines for treating various diseases worldwide. The company's products include EYLEA injection to treat wet age-related macular degeneration and diabetic macular edema; myopic choroidal neovascularization; diabetic retinopathy; neovascular glaucoma; and retinopathy of prematurity.
Read More - Current Price
- $743.35
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 18 Buy Ratings, 4 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $1,099.55 (47.9% Upside)
#6 - Global Self Storage (NASDAQ:SELF)
Low beta stocks feature businesses that sometimes can be a little…boring. But in volatile markets, boring can be beautiful. That brings us to Global Self Storage, Inc. (NASDAQ: SELF). This is a small-cap stock. The real estate investment trust (REIT) has a market cap of just $54 million. And the company has a portfolio that includes just 13 properties.
This hasn’t stopped the company from delivering a performance that is competitive with other storage REITs many times its size. And one way that Global Self Storage competes nicely is through its dividend. REITs must distribute as much as 90% of their earnings as dividends. Currently, the company is rewarding investors with a dividend yield of just under 6% (5.91%).
The stock is down 7% over the last 12 months. However, analysts give the stock a price target that suggests an upside of more than 45%. And at a time when many stocks are overvalued, SELF stock is widely considered to be properly valued.
About Global Self Storage
Global Self Storage is a self-administered and self-managed REIT that owns, operates, manages, acquires, and redevelops self-storage properties. The company's self-storage properties are designed to offer affordable, easily accessible and secure storage space for residential and commercial customers.
Read More - Current Price
- $5.31
- Consensus Rating
- Buy
- Ratings Breakdown
- 1 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $6.50 (22.4% Upside)
#7 - Tootsie Roll Industries (NYSE:TR)
Tootsie Roll Industries, Inc. (NYSE: TR) will likely be the least-known stock on this list. While the company’s main product is iconic, many investors may not be familiar with TR stock. One thing that you should be aware of is that this is a dividend king. It’s increased its dividend every year for the last 52 years.
Most of the company’s common shares are owned by the CEO and chairwoman, Ellen R. Gordon. This does have the effect of ensuring the low beta stock is rarely undervalued. Investors may not find much to get excited about with a forward dividend yield under 1%. But, the company pays a 3% dividend that investors can sell. That means the effective yield is about 4%.
In the past five years, Tootsie Roll Industries has delivered a stock price growth of 20%. Much of that gain, however, has come since October 2022 as investors are fleeing to safety. Nevertheless, this could be a case of great minds thinking alike, so if you’re looking for a safe stock with a rock-solid balance sheet, TR stock is one for you.
About Tootsie Roll Industries
Tootsie Roll Industries, Inc, together with its subsidiaries, engages in the manufacture and sale of confectionery products in the United States, Canada, Mexico, and internationally. It sells its products under the Tootsie Roll, Tootsie Fruit Rolls, Frooties, Tootsie Pops, Tootsie Mini Pops, Child's Play, Caramel Apple Pops, Charms, Blow-Pop, Charms Mini Pops, Cella's, Dots, Junior Mints, Charleston Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff, Dubble Bubble, Razzles, Cry Baby, NIK-L-NIP, and Tutsi Pop trademarks.
Read More - Current Price
- $32.40
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
As this list of stocks confirms, in many cases, low beta stocks pay regular dividends. Dividends are monetary payments made to shareholders that are a percentage of the company's profits. This is another reason that makes them a solid choice for risk-averse investors. Receiving the benefit of regular income payments can be the difference in a stock outpacing inflation.
However, that doesn't mean you shouldn't expect to get a quality return. If you were to have invested in each of these stocks equally for the 12 months ending December 19, 2022 your portfolio would have a return of 35%. That number doesn't include any dividends you could have reinvested which adds the benefit of compounding.
The stocks on this list were found on the MarketBeat website as a free service for every investor. MarketBeat All-Access subscribers also have access to a variety of stock screeners that can help provide recommendations based on your specific criteria.
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