3 Low-Volatility Stocks Showing Strength in a Weak Market
Market sentiment can change in the blink of an eye, and that’s quite evident in the recent selling pressure we’ve seen occurring in the high growth areas. A lot of this likely has to do with the upcoming Federal Reserve meeting and the prospects of an accelerated tapering timeline along with the possibility of rate hikes in the near future, which could be bad news for high valuation stocks. While all is not well in the growth space, investors should note that low volatility stocks have seen large inflows over the past few weeks as funds look to build positions in stocks that can hold up well during market weakness.
While it’s hard to say just how long the rally in low volatility stocks will last, there’s always plenty of positives to consider about adding them to your long-term investing plans. These are companies that can help investors fight inflation with strong dividends and tend to hold up well during significant market corrections. Several of these low volatility names stand out as strong buy-the-dip candidates if we continue seeing a “risk-off” tape, which is why we’ve prepared a brief overview of them below.
Johnson & Johnson (NYSE:JNJ)
One of the standouts over the last few sessions has been Johnson & Johnson, a low-volatility stock that just reclaimed the 200-day moving average. It’s a global leader in the pharmaceutical, medical device, and consumer health care products industry that could be a fine addition to any long-term portfolio at current levels. With a forward P/E ratio of 17.19, Johnson & Johnson offers value when compared to the S&P 500 along with an attractive dividend yield of 2.52%. It’s also worth noting that the company is a dividend aristocrat, which means investors can rely on continued dividend growth for the long haul.
As a reminder, Johnson & Johnson is one of the few companies that developed a COVID-19 vaccine, which added $502 million in additional revenues during Q3. With renewed concerns about new variants of the virus and FDA recommending boosters for people 18 and older, the company should continue seeing a short-term sales bump for the next few quarters and perhaps longer. Johnson & Johnson also has an exciting drug pipeline along with best-selling drugs like Stelara, Darzalex, and Imbruvica, which means the company offers stable earnings alongside growth potential.
This low beta food and consumer staples retailer has been a major underperformer in 2021, as the stock is just about flat year-to-date at the time of this writing. However, Walmart has been rallying over the last few sessions and also just reclaimed the 200-day moving average, which tells us that buyers are once again starting to scoop up shares. Walmart is the world’s largest retailer, operating a chain of over 11,000 discount department stores, wholesale clubs, and supercenters. The company has been making some big investments recently, including supply chain improvements, expanded e-commerce offerings, and a new product and geographic mix.
These strategic moves should pay off in a big way over the long term, and the company could be positioned to gain a lot of market share in 2022 as consumers seek out the best value given rising costs. It’s also worth noting that Q4 tends to be a strong period for major retailers like Walmart thanks to the holiday season, and the fact that the company has a diversified business model that can deliver consistent earnings in any economy makes it an attractive pick amidst so much uncertainty.
This research-based biopharmaceutical stock is hitting highs not seen since 2018 and offers a very attractive dividend yield of 4.46%, both strong reasons to consider adding shares. AbbVie’s key drug, Humira, is approved to treat 14 autoimmune diseases and has historically generated the majority of the company’s revenue. Some investors might be hesitant to add shares given how competing biosimilars will eat into AbbVie’s Humira revenue over the long term, but the company has plenty of intriguing drug candidates in its pipeline and growth drivers like immunology drugs Rinvoq and Skyrizi that should help to ease some of those concerns.
AbbVie has also made deals with competitors to delay the sales of Humira biosimilars until 2023, which is another positive for investors to consider in the short term. Finally, AbbVie recently acquired Botox-manufacturer Allergan plc for $63.4 billion, which further diversifies the company’s portfolio and should lead to synergies in the coming years. It’s hard to deny the relative strength that AbbVie stock has shown over the last few sessions, so keep an eye out for dips if you are interested in one of the best dividend stocks on the market.