They say that the market takes the stairs up and the elevator down, which is why it's never a bad idea to have a few low-beta stocks in your portfolio. These are stocks that don't move as much as the overall market and can pose less risk during periods of volatility, which is undoubtedly something investors might appreciate at this time.
When it comes down to it, every investment decision is based on taking risks and how you will be compensated for exposing your capital to the downside. While these low-beta stocks might not offer the same upside as some of the high-flying growth stocks, they do tend to outperform the market over the long run and can certainly play a valuable part in a diversified portfolio.
With volatility increasing due to the new COVID variant and the Federal Reserve considering an earlier taper timetable, adding more conservative stocks could be a very savvy move. Let's look at 3 low-beta stocks to buy with volatility on the rise.
1. Thermo Fisher Scientific
This leading life sciences company is a great option to consider with healthcare in the global spotlight. Thermo Fisher Scientific (NYSE:TMO) is a leading developer, manufacturer, and provider of analytical instruments and complex services for life sciences, drug discovery, and industrial applications.
It's the type of diversified business that investors can count on for years to come, particularly since the company is seeing sales growth across all of its business segments at this time. A lot of this has to do with Thermo Fisher's industry-leading position in almost all of its product categories, which allows the company to take advantage of cross-selling opportunities and continue gaining market share over time.
Thermo Fisher is also a strong option thanks to the company's COVID-19 related products, including PCR testing kits and more. In Q3, Thermo Fisher reported revenue of $9.33 billion, up 9% year-over-year, and raised its 2021 revenue and earnings guidance, which is another reason to consider adding shares. Thermo Fisher has a long history of innovation through research and development, which means that lucrative new products are always within the realm of possibilities further down the road.
2. Procter & Gamble
In general, investors tend to park their capital in consumer staples stocks like Procter & Gamble (NYSE:PG) when there is a lot of uncertainty about the market. It makes sense, as it's a company that sells branded consumer packaged goods that always see steady demand regardless of economic conditions.
With instantly recognizable brands including Oral-B, Crest, Head & Shoulders, Old Spice, Tide, Mr. Clean, Pampers, Charmin, Bounty, and more, this is a best-in-class consumer staples company that even offers upside thanks to growth opportunities in e-commerce and international markets.
Procter & Gamble also stands out as a strong low-beta holding to consider, thanks to its dividend aristocrat status, as the company has raised dividends for 65 consecutive years. The stock currently offers a 2.38% dividend yield, which is undoubtedly attractive amidst concerns of rising inflation.
Speaking of inflation, although Procter & Gamble will have to deal with the impacts of higher commodity costs in the coming quarters, its brand and dominant market position means that it can raise prices in specific product categories to reduce the overall impact on its earnings.
3. Waste Management
Finally, investors might want to take a look at a company like Waste Management (NYSE:WM) thanks to its low-beta value, defensive properties, and proven business model. We know that dealing with waste and helping with recycling is a service that will always be needed, especially as the country's population continues to grow.
Waste Management is the largest waste disposal company in North America and provides collection, transfer, recycling, and resource recovery. With over 21 million customers in the U.S. and Canada and a dominant position in landfill ownership, this is essentially the only waste services company you will ever need to own.
The stock has been trending throughout 2021 and is up over 38% year-to-date, making it one of the biggest low-beta year winners. Volume growth for the company has already passed pre-pandemic levels, which is a positive indication of the current state of its business. At the same time, a 1.43% dividend yield is another big plus for investors interested in adding income to their portfolios.
Finally, the fact that Waste Management offers exposure to construction end markets could mean good things for the company's earnings as that industry continues to rebound.