Low-beta stocks allow investors to sleep well at night as the latest developments on interest rate hikes and their effects on the market cause anxiety. Despite things being slightly better than in previous years, central banks are still open to increasing interest rates, and oil prices are still rising. Experts are still wary; we’ll likely continue hearing negative analyses and predictions. These sentiments often force investors to be defensive or drive them to sell their positions prematurely. Well, who can blame them? Capital preservation should be one of our first priorities in this fierce financial jungle to fight another day.
The good thing is that some stocks aren’t heavily correlated to the main market movements. These “low-beta” stocks also have lower volatility than the rest of the securities in the market. Beta measures a security’s relative volatility to its overall market, like the S&P 500 index. Stocks with lower than 1.0 beta tend to deviate from how the market moves, potentially protecting conservative investors from the impact of sudden shifts in the market. Low-beta investing is an accepted strategy that has proven its resiliency in long-term plans. Here are three low-beta stocks we think are worth checking out.
Low-Beta Stocks: BellRing Brands, Inc (BRBR)
BellRing Brands, Inc. (NYSE:BRBR) is a holdings company for consumer products, mainly offering ready-to-drink (RTD) protein shakes, powders, and health and protein-based consumer goods. BRBR has two flagship brands: Premier Protein, which is offered as an RTD protein shake, powder, or beverage, and Dymatize, which is an assortment of sports nutrition supplements like protein bars, whey protein isolates, etc., which are all offered and distributed across its network of e-commerce channels, clubs, and specialty stores.
BRBR is steadily maintaining its business momentum. According to the latest quarterly announcement, Premier Protein and Dymatize products have experienced 26.8% and 38.6% growth YoY based on dollar consumption. BellRing Brands is also maintaining its earnings performance growth, with the latest EPS beating analyst estimates by 6.25%. Its impressive and consistent performance and a 0.80 60-month beta make it a great prospect for low-beta stocks to buy.
Exelixis, Inc. (EXEL)
Exelixis, Inc. (NASDAQ:EXEL) is an oncology company at the forefront of cancer care. Its four main products include the flagship Cabozantinib, a multiple tyrosine kinases inhibitor. Cabozantinib is approved as CABOMETYX for renal cell carcinoma and COMETRIQ for metastatic thyroid cancer. The other products are COTELLIC and MINNEBRO, used for melanoma and hypertension treatments.
EXEL is making strides in steadily progressing its pipeline and business. According to the company’s recent quarterly results, CABOMETYX maintained its status as a leading choice in renal cell carcinoma. It has also completed its Phase 1 (STELLAR-001) study of zanzalintinib, progressed its Phase 3 pivotal trials, and added plans for additional trials for the compound. Analysts are also optimistic about EXEL, earning a “Strong buy” rating and fair value estimate of $25.58. While there are limits to the upside, its long-term pipeline and potential are why we recommend this low-beta stock.
CME Group Inc. (CME)
Last on this list, we have CME Group Inc. (NASDAQ:CME), a futures, options, cash, and OTC (over-the-counter) derivatives contracts provider for the financial market. The company offers products spanning different asset classes and markets like agricultural commodities, energy, FX, metals, interest rates, and equity indices. The company also operates as a clearing and settlement clearinghouse in trading futures and options contracts, OTC derivatives, and other asset classes.
CME’s diverse set of derivative products in various asset classes has made it one of the leading go-to providers of derivative contracts like the micro E-mini S&P 500 and SOFR futures. CME is also one of the few companies benefitting from the market focus on interest rates, as this provides additional volatility and trading volume in its interest rate futures portfolio.
In addition, market uncertainty has also been one of the company’s profit drivers, specifically for its revenue products, which grew by 10%. CME also beat analyst expectations with an earnings surprise of 5.5%. The company’s continued growth shows how it can perform well regardless of market conditions.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.