10 Market-Beating, Low-Beta Stocks

by Dan Burrows | May 22, 2012 7:30 am

10 Market-Beating, Low-Beta Stocks

Investors who’ve been slammed by two wealth-crushing sell-offs since the young century began are understandably keener than ever on playing some defense in their equity portfolios. Although there’s no such thing as a crash-proof stock, some names do indeed fare much better than others when the bottom falls out of the market.

That’s why investors can benefit from checking out a stock’s beta, which is a measure of volatility. A beta of 1.0 means the stock moves essentially in line with the broader market. Theoretically, a beta of 1.5 indicates that a stock is 50% more volatile than the S&P 500. Yes, it will rise faster than the broader market when everything is rising — but it will also fall faster and farther when the market is selling off.

Low-beta stocks, on the other hand, tend to lag when the market is taking off, but hold up much better when the S&P 500 is in the tank. Best of all, sometimes these relatively boring names produce market-beating returns.

Using data from S&P Capital IQ, we screened the S&P 500 looking for big, brand-name stocks with the lowest five-year betas that have also crushed the broader market over the past five years.

Here’s a look at how our top 10 names have performed, including dividends. Keep in mind that the S&P 500 is down 1% on a total-return basis over the same period, and you can see that sometimes boring is beautiful.

General Mills (NYSE:GIS[1])
Five-year total return: 48%
Beta: 0.23

Hershey (NYSE:HSY[2])
Five-year total return: 49%
Beta: 0.27

Consolidated Edison (NYSE:ED[3])
Five-year total return: 49%
Beta: 0.28

Family Dollar Stores (NYSE:FDO[4])
Five-year total return: 107%
Beta: 0.30

Abbott Laboratories (NYSE:ABT[5])
Five-year total return: 23%
Beta: 0.31

Southern Co. (NYSE:SO[6])
Five-year total return: 55%
Beta: 0.31

Progress Energy (NYSE:PGN[7])
Five-year total return: 39%
Beta: 0.33

Wal-Mart Stores (NYSE:WMT[8])
Five-year total return: 50%
Beta: 0.35

Kimberly-Clark (NYSE:KMB[9])
Five-year total return: 35%
Beta: 0.38

Clorox (NYSE:CLX[10])
Five-year total return: 18%
Beta: 0.39

Endnotes:
  1. GIS: http://studio-5.financialcontent.com/investplace/quote?Symbol=GIS
  2. HSY: http://studio-5.financialcontent.com/investplace/quote?Symbol=HSY
  3. ED: http://studio-5.financialcontent.com/investplace/quote?Symbol=ED
  4. FDO: http://studio-5.financialcontent.com/investplace/quote?Symbol=FDO
  5. ABT: http://studio-5.financialcontent.com/investplace/quote?Symbol=ABT
  6. SO: http://studio-5.financialcontent.com/investplace/quote?Symbol=SO
  7. PGN: http://studio-5.financialcontent.com/investplace/quote?Symbol=PGN
  8. WMT: http://studio-5.financialcontent.com/investplace/quote?Symbol=WMT
  9. KMB: http://studio-5.financialcontent.com/investplace/quote?Symbol=KMB
  10. CLX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CLX

Source URL: http://investorplace.com/2012/05/10-market-beating-low-beta-stocks/
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