7 Best Low-Volatility Stocks to Buy

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Similarly, predicting when a volatile stock is exhausting its current bullish momentum can mean shorting the stock, or buying puts, just as the downturn begins. These types of short-term trades may produce smaller profits individually, but a highly volatile stock can provide almost infinite opportunities to trade the swing. Numerous lesser payoffs in a short period of time may well end up being more lucrative than one large cash-out after several years of waiting. Their positive rating mirrors the Wall Street consensus, which includes a total of 29 Buy or Strong Buy ratings versus nine Holds and not a single Sell.

How can investors identify stocks with a low-volatility factor?

If you’re looking for stocks with the least volatility, you choose them by sector, by reviewing the volatility of individual stocks, or by investing in low-volatility funds. “This could be a positive for Verizon as the wireless industry’s leading incumbent. As the macro-economy slowly recovers and work-at-home becomes the ‘new normal,’ connectivity is more what is embedded systems programming critical than ever for both consumer and businesses.” Wall Street is broadly straddling the fence between Buy and Hold on KMB, but the consumer staples play has room to appreciate thanks aggressive cost-cutting that is helping margins and expansion opportunities outside the U.S. The company recently took a major step in boosting its presence in emerging markets by acquiring Softex Indonesia, a leading diaper maker serving Southeast Asia. Costco’s global comparable-store sales for the fourth quarter ended Aug. 30 grew 11.4% year-over-year, and 9.2% for the full year.

There is another way to look at the LV30 index and include it in your portfolio. However, in the case of the LV30 index, the financial sector contributed only 5.7% weightage.

A highly volatile security hits new highs and lows quickly, moves erratically, and has rapid increases and dramatic falls. The following stocks all sport low “beta” – a measurement of how volatile an investment is to a relevant benchmark. If a stock has a beta of less than 1.0, for instance, that theoretically means it’s less volatile than the S&P 500; if it’s greater than 1.0, the stock is more volatile. They also enjoy high ratings from Wall Street analysts and deliver above-average dividends, which can help boost performance when price gains are lacking. Investors looking for solid, steady returns over a long period of time should generally avoid stocks that have wild changes in value, though. When a stock is volatile, it can be harmful to long-term returns, not to mention the emotional toll that wild leveled reading library for kids k price swings can have on an investor.

Stable Earnings and Cash Flows

1. While many academic studies and indices are based on simulations going back years, some research spans over 90 years, showing low-volatility stocks outperform high-volatility stocks in the long run (see image).
2. For those looking to speculate on volatility changes, or to trade volatility instruments to hedge existing positions, you can look to VIX futures and ETFs.
3. Their positive rating mirrors the Wall Street consensus, which includes a total of 29 Buy or Strong Buy ratings versus nine Holds and not a single Sell.
4. Warehouse club operator Costco Wholesale (COST, $358.46) has emerged as one of the major winners of pandemic-related consumer purchasing, with shares up 22% year-to-date.
5. This fund is well-established with about $5 billion in assets at present, proving that even in times of trouble there is a large cohort of investors that are interested in this strategy.

Its well-known food brands include Skippy, Spam, Hormel, Jenni-O and more than 30 others. The company is a Dividend King that has generated 54 consecutive years of dividend growth. Hormel’s dividend improved by 11% last November and 13% annually over the last five years. Colgate-Palmolive (CL, $77.06) is a consumer products conglomerate with business lines in oral care, personal care, home care and pet nutrition.

So overall, it is an index for people who are looking for long-term appreciation with relatively stable volatility. Next, all the selected stocks are ranked on the basis of their volatility score. Volatility, in this case, is calculated as the standard deviation of the daily price returns of the last year. Standard deviation measures how widely prices of a stock are dispersed from its average price. So, the higher the standard deviation of any security, the higher its volatility.

This means they can go long on the stock, or buy calls, as the price nears a low and then ride the upswing to sell at or near the high. Most of the remaining portfolio is in highly rated corporate debt from rock-solid companies like Bank of America (BAC) or JPMorgan Chase (JPM). Mondelez became its own publicly traded entity back in late 2012, when it was spun out from Kraft Heinz (KHC). It admittedly hasn’t held a candle to the market since then, performance-wise, with its 230% total return lagging the S&P 500 by 110 percentage points. And that growth is very likely to come not from the U.S. nor other developed countries, but emerging markets.

For instance, if you’ve ever bought insurance for your mobile phone, a computer, or a piece of furniture, it’s possible that Assurant had its hand in that. Assurant’s services also span multifamily and manufactured residential insurance, vehicle protection plans, flood insurance and more. While each of those certainly has some chance of occurring, “we think the ‘Street’ is overly optimistic in betting that such a rosy outcome is likely,” Wren adds. Now, the market is consolidating gains to start the new year following a big run higher in 2023, though the pullback has been modest. However, I’m sorry to say low-vol stocks still might be of use this year, for several reasons.

The company also has world-class pharmaceutical and medical device businesses and owns blockbuster drugs like Stelara, Xarelto and Imbruvica. JNJ holds the No. 1 or No. 2 market shares worldwide in most product categories. The company has 26 products in its portfolio that each generate over $1 billion in annual sales. The stock market suffered a turbulent September, and a number of factors are pointing toward an equally bumpy rest of the year. That likely will have investors looking for a smoother market ride than what the major indices have to offer – and one such way to do that is to buy low-volatility stocks to manage risk. When constructing a portfolio that includes the low-volatility factor, investors should consider factors such as risk tolerance, investment horizon, and return objectives.

What’s best penny stocks to watch for march 2021 more, a rising interest-rate environment has pushed the yields of this short-term fund up to significant levels that are roughly three times the yield on the S&P 500 right now. That is a good source of income as well as a decent hedge against future declines. These picks are components of the S&P MidCap 400 Index – that is, the next 400 stocks in line when you get past the larger S&P 500 Index of blue chip stocks. And then, XMLV layers on a screen to hand pick the top 20% of companies with the lowest realized volatility over the past 12 months. Another more tactical way to play low-volatility ETFs is to focus on the next tier of the market down from your usual blue chip stocks.

In addition to straddles and puts, there are several other options-based strategies that can profit from increases in volatility. On the other hand, the  protective put is used to hedge an existing stock or a portfolio. When establishing a protective put, the investor wants prices to move higher but is buying puts as a form of insurance should stocks fall instead.

CERN shares are rated Buy or Strong Buy by 11 analysts and Hold by nine – no one has a Sell against Cerner currently. Investors should carefully consider their individual risk tolerance, investment horizon, and return objectives when constructing their portfolios and employing strategies like minimum variance, equal weight, or risk-parity approaches. For example, more risk-averse investors with a longer investment horizon may allocate a larger portion of their portfolio to low-volatility stocks, while more aggressive investors with shorter time horizons may choose a smaller allocation. Volatility denotes the upward or downward movement of the stock market or an individual stock. This means low volatility can be described as security, asset, or fund whose value changes at a steady pace over a period of time, instead of fluctuating dramatically.

Bollinger Bands are often used as an indicator of the range a security trades between, with the upper band limit indicating a potentially high price to sell at, and the lower band limit indicating a potential low price to buy at. Although other volatility metrics are discussed in this article, the standard deviation is by far the most popular. If you’re looking for a single holding to invest in a diversified way with a lower risk profile, then this global low-volatility ETF could be worth a closer look. The iShares MSCI EAFE Min Vol Factor ETF (EFAV, $76.63) is an international fund that focuses on “EAFE” companies instead of domestic ones – that is, those headquartered in Europe, Australasia and the Far East. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.