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Stock Market Volatility Lingers in November: 5 Low-Beta Picks

Nalak Das
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Stock Market Volatility Lingers in November: 5 Low-Beta Picks

Concerns regarding global growth slowdown fueled by slump of crude oil prices, lower guidance from technology companies and surge in U.S. dollar are the primary causes behind the recent volatility.

Wall Street performed impressively in the first week of November after enduring a difficult October, which was its worst monthly performance this year. However, the rally was short-lived as the last three sessions wiped out all the gains the market achieved in the first week of November.

Concerns regarding global growth slowdown fueled by slump of crude oil prices, lower guidance from technology companies, surge in U.S. dollar, return of inflationary fears and lingering trade conflicts between the United States and China are the primary causes behind the recent volatility. At this juncture, it will be prudent to invest in in low-beta stocks with favorable Zacks Rank to keep one’s portfolio safe from day-to-day market fluctuations.  

U.S. Crude Oil Price Fell Below Psychological Barrier

On Nov 12, U.S. benchmark West Texas Intermediate (WTI) crude oil future price for December delivery settled at $58.86 a barrel. This was the eleventh straight loss for WTI crude prices, the longest slide since March 1983. Moreover, for the first time since February, WTI crude oil price settled below a key psychological barrier of $60.

Recent nosedive of crude prices has raised eyebrows about an impending global economic slowdown. On Nov 8, WTI Crude oil entered into bear market as price tumbled more than 20% from its recent peak recorded at Oct 3.

Concerns over Global Economic Growth  

On Nov 12, shares of Apple Inc. and its various component suppliers plummeted as prospects of a global slowdown raised apprehensions regarding the future growth of high-tech products.  Moreover, China’s automobile sales fell 11.7% in October, marking its largest drop since 1990. Notably, China is the biggest car market globally.

Additionally, the U.S. government has warned that if the upcoming meeting between President Donald Trump and Chinese leader Xi Jinping later this month fails to find an amicable solution, then it may impose tariffs worth $267 billion on all remain Chinese products in the first week of December. Several industry experts have opined that, continuation of trade war will result in a potential slowdown in China’s domestic demand for goods from other Asian countries, resulting in global economic slowdown.

US Dollar Index Hits 16-Month High

On Nov 12, the ICE U.S. Dollar Index (DXY), which measures the greenback’s strength against a basket of six major currencies, touched 97.28, its highest level since Jun 23, 2017. Demand for the dollar intensified after the Fed indicated for a possible rate hike in December and again in early 2019 last week.

Moreover, concerns regarding the acceptance of the Brexit deal by the UK parliament and a tussle between Italy and the European Union concerning fiscal discipline resulted in lowered values of Pound and Euro compared with the U.S. dollar. However, investors are concerned that a rising dollar will hurt sales of U.S. multinational companies as their products will be more expensive in the international markets.

Our Top Picks

At this stage, investment in low-beta stocks will be fruitful. The beta is equal to 1 which means that the stock is as volatile as the market. So, a stock is relatively more volatile if it has beta greater than 1 and less volatile if beta is less than 1. However, picking winning stocks can be a difficult task.

This is where our VGM Score comes in handy, which helps us to select winners. We narrowed down our search on five stocks. Each of these stock have a Zacks Rank #1 (Strong Buy) and a VGM Score A. You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows price performance of our five peaks year to date

Great Lakes Dredge & Dock Corp. GLDD is the largest provider of dredging services in the United States and internationally. It has a beta of 0.62. It has expected earnings growth of 170.4% for current year. The Zacks Consensus Estimate for the current year has improved by 471.4% over the last 30 days.

Intel Corp. INTC is one of the world's largest semiconductor chip maker for desktop PC and notebooks. It has a beta of 0.88. It has expected earnings growth of 30.9% for current year. The Zacks Consensus Estimate for the current year has improved by 9.7% over the last 30 days.

Rent-A-Center Inc. RCII leases household durable goods to customers on a rent-to-own basis in the United States. It has a beta of 0.60. It has expected earnings growth of 255.6% for current year. The Zacks Consensus Estimate for the current year has improved by 1.2% over the last 30 days.

Mercury General Corp. MCY is engaged primarily in writing all risk classifications of automobile insurance in a number of states, principally California. It has a beta of 0.23. It has expected earnings growth of 70.7% for current year. The Zacks Consensus Estimate for the current year has improved by 27.3% over the last 30 days.

MarineMax Inc. HZO is the largest recreational boat and yacht retailer of the United States. It has a beta of 0.94. It has expected earnings growth of 11.2% for current year. The Zacks Consensus Estimate for the current year has improved by 12.5% over the last 30 days.

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Great Lakes Dredge & Dock Corporation (GLDD) : Free Stock Analysis Report
 
Rent-A-Center, Inc. (RCII) : Free Stock Analysis Report
 
Mercury General Corporation (MCY) : Free Stock Analysis Report
 
MarineMax, Inc. (HZO) : Free Stock Analysis Report
 
Intel Corporation (INTC) : Free Stock Analysis Report
 
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