Buy 5 Low-Beta Stocks Below $15 To Counter Severe Volatility

Despite providing positive returns so far in September, Wall Street is also marred with intermittent volatility. In the past week, market volatility has intensified owing to several economic and political factors.

The severity of market volatility can be explained by an example. On Sep 24, the Dow closed losing 142.22 points or 0.5%. At session high, the Dow was up 129.69 points or 0.4% and at session low, the blue-chip index fell 245.03 points or 0.9%.

Likewise, the S&P 500 ended down 25.16 points or 0.8%. At session high, the S&P 500 was up 16.27 points or 0.5% and at session low, the benchmark index was down 34.04 points or 1.1%. Meanwhile, the Nasdaq Composite finished shedding 118.84 points or 1.5%. At session high, the Nasdaq Composite was up 46.37 points or 0.6% and at session low, the tech-laden index declined 117.26 points or 1.8%.

Uncertainty Over Interim Trade Deal

On Sep 24, speaking to the United Nations General Assembly in New York, President Donald Trump said that he will not accept a “bad deal” in trade talks with China. While expressing his hope of reaching at least an interim trade deal with the Asian economic giant and other major trading partners of the United States, Trump categorically stated that any deal which goes against the interest of American people will not be accepted.

The Trump administration wants China to substantially increase imports of U.S. agricultural and farm products and comply with intellectual property rights related to high-tech industries, which China had pledged to follow before the negation process broke down in May.

On the same day, Chinese State Councilor and Foreign Minister Wang Yi said in New York that China wants the U.S. government to refrain from imposing new tariffs or increasing rates of existing tariffs levied on Chinese goods. More importantly, the Trump administration should withdraw all restrictions that have been imposed on Chinese tech behemoths like Huawei and ZTE (HK:0763) to do business with U.S. corporates.

Initiation of Impeachment Proceedings Against Trump

On Sep 24, Democrat House Speaker Nancy Pelosi said that the House will start an impeachment inquiry into President Donald Trump. Democrat representatives are concerned about a telephonic conversation between President Trump and Ukrainian President Volodymyr Zelensky. Trump had allegedly put pressure on Ukraine to investigate the family of former vice president Joe Biden, one of his top rivals for the presidency in 2020.

One of the major reasons of yesterday’s stock market plunge was an impending impeachment of President Trump, which may result in severe political turmoil in the United Sates.

Consumer Confidence Decline

On Sep 24, the Conference Board reported that U.S. consumer confidence for the month of September came in at 125.1, well below the consensus estimate of 133.4. The index for August was also reduced to 134.2 from 135.1, reported earlier. Notably, September’s index marked the largest drop in nine months.

The Present Situation Index based on consumers’ assessment of the current business and market conditions decreased from 176.0 in August to 169.0 in September. The Expectations Index based on consumers’ short-term outlook for income and market conditions also declined from 106.4 in August to 95.8 in September.

Our Top Picks

At this juncture, we have applied five criterions to select five stocks to protect one’s portfolio. First, assuming the market will remain extremely volatile, low beta (beta value less than 1 but greater than zero) stocks will be less volatile than the broader market. Second, the stocks should be providing regular dividend, ensuring a steady income stream.

Third, all five stocks are currently priced below $15, making them affordable to general investors. Fourth, the stocks have high growth potential for the rest of the year and finally, each of these carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows price performance of our five picks in the past three months.

Exantas Capital Corp. (NYSE:XAN) is a real estate investment trust that primarily focuses on the origination, holding and management of commercial mortgage loans and commercial real estate-related debt investments in the United States.

The company has expected earnings growth of 60.6% for the current year. The Zacks Consensus Estimate for the current year has improved by 6.5% over the last 60 days. The stock has a dividend yield of 7.73% and beta of 0.76.

TiVo Corp. (NASDAQ:TIVO) provides media and entertainment products for the consumer entertainment industry worldwide. It operates in two segments, Product and Intellectual Property Licensing.

The company has expected earnings growth of 10.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 12.2% over the last 60 days. The stock has a dividend yield of 3.97% and beta of 0.20.

North American Construction Group Ltd. (TSX:NOA) provides heavy construction and mining services primarily in Canada. It offers services to large oil, natural gas and resource companies.

The company has expected earnings growth of 226.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 28% over the last 60 days. The stock has a dividend yield of 1.04% and beta of 0.60.

Arbor Realty Trust Inc. (NYSE:ABR) is a specialized real estate finance company investing in real estate-related bridge and mezzanine loans, preferred equity, mortgage-related securities and other real estate-related assets.

The company has expected earnings growth of 9.9% for the current year. The Zacks Consensus Estimate for the current year has improved by 8.1% over the last 60 days. The stock has a dividend yield of 8.90% and beta of 0.61.

Nokia (HE:NOKIA) Corp. (NYSE:NOK) is engaged in the network and technology businesses worldwide. It operates in four segments: Ultra Broadband Networks, Global Services, IP Networks and Applications, and Nokia Technologies.

Although the company’s expected earnings growth is 0% for the current year, next year’s earnings growth has improved to 62%. Notably, the Zacks Consensus Estimate for the current year has improved by 8% over the last 60 days. The stock has a dividend yield of 0.88% and beta of 0.28.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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