Buy 5 Top Low-Beta High-Yielding Stocks Amid Severe Volatility

With the coronavirus pandemic showing no signs of letting up, Wall Street continues to grapple with severe volatility, which has been plaguing it over the last four weeks. With market participants unable to estimate the extent and impact of the coronavirus crisis have begun panic selling off of risky assets like equities.

The market has been on a roller-costar ride, wherein it logged a gain of 5-7% one day only to decline 7-8% on the very next day. Market participants are yet to see any signs of stabilization.

As the stock market valuation plunged significantly, a few low-beta (beta value less than 1 but greater than zero) stocks with high dividend yield is currently available at deep discount. Investment in some of those stocks with a favorable Zacks Rank is likely to cushion your portfolio against volatility.

Stimulus Measures Fail to Deliver

On Mar 15, in an unprecedented move, the Fed cut the benchmark lending rate by 1% point to a range of 0-0.25% from 1-1.25%. Notably, on Mar 3, the central bank cut the Fed fund rate by 50 basis points. This means, within two-weeks, the Fed cut interest rate by 1.5% as an emergency monetary stimulus.

Moreover, the Fed has initiated a massive $700 billion quantitative easing program to inject liquidity in the system. Last week, the Fed made an announcement to unveil $1.5 trillion repo program to stabilize the volatile market.

Meanwhile, the President has signed an $8.3 billion emergency relief package to combat the coronavirus outbreak. The government also decided to introduce another $50 billion package for emergency purposes and is reportedly contemplating the introduction of 0% payroll tax rate for the rest of this year.

Moreover, on Mar 17, President Trump sought the approval of the Congress for a massive fiscal stimulus worth anywhere from $850 billion to more than $1 trillion to counter the coronavirus effect on the economy. Of this package, $500 to $550 billion is likely to be utilized in direct payments or tax cuts. Small business assistance will be around $200 to $300 billion. Airline industry is likely to get $50 to $100 billion.

However, the market paid no almost any heed to the stimulus after the President hinted that the country may succumb to recession this year. Several economists and financial experts have warned that extreme volatility is likely to continue as long as the coronavirus’s impact is not neutralized.

Our Top Picks

We have narrowed down our search to five low-beta high-yielding stocks at ultra-cheap prices. These stocks have positive growth potential for 2020 and witnessed upward earnings estimate revision for the year in the past 30 days despite coronavirus-induced market mayhem. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The chart below shows the price performance of our five picks in the past month.

 

Constellation Brands Inc. STZ produces, imports and markets beer, wine and spirits in the United States, Canada, Mexico, New Zealand and Italy. The company has an expected earnings growth rate of 4.8% for the current year (ended February 2021). The Zacks Consensus Estimate for the current year has improved 0.2% over the past 30 days. The stock has a beta of 0.76 and a dividend yield of 2.40%. The share price has plunged 42% from its 52-week high.

MVC Capital Inc. MVC provides long-term equity and debt investment capital to fund growth, acquisitions and recapitalizations of small and middle-market companies in a variety of industries located in the United Sates.

The company has an expected earnings growth rate of 6.2% for the current year (ended October 2020). The Zacks Consensus Estimate for the current year has improved 3% over the past 30 days. The stock has a beta of 0.70 and a dividend yield of 9.86%. The share price has plunged 38.3% from its 52-week high.

DICK'S Sporting Goods Inc. DKS operates as a major omni-channel sporting goods retailer in the United Sates. The company has an expected earnings growth rate of 4.6% for the current year (ended January 2021). The Zacks Consensus Estimate for the current year has improved 1.6% over the past 30 days. The stock has a beta of 0.82 and a dividend yield of 5.19%. The share price has plunged 62.7% from its 52-week high.

Bloomin' Brands Inc. BLMN owns and operates casual, upscale casual, and fine dining restaurants in the United States and internationally. The company has an expected earnings growth rate of 18.2% for the current year. The Zacks Consensus Estimate for the current year has improved 6.4% over the past 30 days. The stock has a beta of 0.44 and a dividend yield of 10.68%. The share price has plunged 74.3% from its 52-week high.

DRDGOLD Ltd. DRD is a gold mining company engaging in surface gold tailings retreatment business in South Africa. Its activities include exploration, extraction, processing, and smelting.

The company has an expected earnings growth rate of 562.5% for the current year (ending June 2020). The Zacks Consensus Estimate for the current year has improved 2% over the past 30 days. The stock has a beta of 0.09 and a dividend yield of 4.74%. The share price has plunged 29.8% from its 52-week high.

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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
 
Constellation Brands Inc (STZ) : Free Stock Analysis Report
 
Bloomin' Brands, Inc. (BLMN) : Free Stock Analysis Report
 
DRDGOLD Limited (DRD) : Free Stock Analysis Report
 
MVC Capital, Inc. (MVC) : Free Stock Analysis Report
 
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