With interest rate uncertainty on the rise across the market, it may be time to buy stocks with a demonstrated history of low volatility. As investors pull back high-stakes bets on the timing and frequency of rate cuts this year, erratic moves across the broader market have risen. The Cboe Volatility Index — a yardstick of expected market volatility — briefly rose above 21 on Friday, its highest level since last October. This heightened volatility has been reflected in the broad market, where major averages were whipsawed last week and fell for a third straight week after a strong rally to start the year. But there are always islands of calm amid the chaos. Using FactSet data, CNBC Pro screened for stocks that have demonstrated both a history of low volatility and whose earnings are forecast to grow this year. The specific criteria included: Having a below-average, five-year beta under 1 A 5-year price volatility score of 7 or lower, versus the S & P 500’s score of 5.3 Having risen in price over the past month Boasting full-year EPS growth of more than 5% UnitedHealth was one name that made the cut. The insurance stock currently has a 5-year beta of 0.54 relative to the S & P 500, and a price volatility score of 6.28. Its earnings per share could grow 10.3% this year. Analysts covering UnitedHealth are overwhelmingly positive on the stock, and on average see the potential for the stock to gain 13% over the next year, based on consensus price targets. Earlier this week, shares of UnitedHealth soared after it posted better-than-expected first-quarter earnings and revenue . The stock finished the week 14% higher, leaving it down less than 5% on the year. With a 5-year beta of 0.78 versus the S & P 500 and a 5-year price volatility score of 6.50, medical equipment maker Boston Scientific also turned up on the screen. Its earnings per share are projected to grow at 10% this year. Analysts are bullish, with most assigning Boston Scientific a buy or strong buy rating. The average analyst’s consensus price target implies about 10% potential upside for the stock. Earlier this month, Citigroup analyst Joanne Wuensch named Boston Scientific one of her top picks in medical technology . The analyst added that there’s “more juice in the tank” for the category to keep up its momentum this year. Shares of Boston Scientific have risen 16.5% so far in 2024, after advancing in each of the past three years. Pharmaceutical company Merck also has a track record of low volatility. Compared to the S & P 500, Merck’s 5-year beta comes in at 0.39, while its 5-year price volatility scores a 6.06. Merck’s earnings are estimated to grow 467% this year. Analysts are similarly united in their optimism regarding the stock, with the consensus price target suggesting further 9.3% upside. Shares of Merck have already climbed 15% this year. Last month, Merck after receiving approval from the Food and Drug Aministration for Winrevair, a drug designed to treat a life-threatening lung disease. Other names that showed up in the screen of low-volatility stocks included clean energy provider NextEra Energy and employer services company Automatic Data Processing .
These steady stocks could help you sleep at night as other parts of market are fraught with risk
Apr 21, 2024
