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Navigating Volatility: 3 Stocks Worthy of Consideration
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Following a mixed session yesterday, investors remain focused on Jerome Powell’s testimony.
Needless to say, all are seeking clarification as we try to wade through a highly-unique economic backdrop and a year-long tightening campaign.
Powell believes returning to bigger rate hikes could be necessary if data suggests the U.S. economy is heating up again.
It’s worth noting that the Fed opted for a 25bps hike in its latest meeting, a step down from the prior 50bps hike in December and the 75bps hikes we saw in 2022.
And the market reacted to these comments accordingly, with stocks witnessing adverse price action in response.
During times of heightened uncertainty, targeting low-beta stocks can provide a valuable shield to the broader market’s movements.
Three low-beta stocks – Fiserv , Visa (V - Free Report) , and Stryker (SYK - Free Report) – could all be considerations for investors seeking heightened portfolio defense.
The chart below illustrates the performance of all three stocks year-to-date, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer look at each one.
Fiserv
Fiserv is a global fintech and payments company with solutions for banking, global commerce, merchant acquiring, billing and payments, and point-of-sale. The stock presently carries a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
Fiserv’s valuation multiples don’t appear stretched, with the current 16.1X forward earnings multiple sitting well beneath the 22.5X five-year median and the Zacks Business Services sector average.
Image Source: Zacks Investment Research
In addition, it’s hard to ignore the company’s growth trajectory, with estimates suggesting 12.6% year-over-year earnings growth in its current fiscal year (FY23) and a further 14% in FY24.
The projected earnings growth comes on top of forecasted year-over-year revenue upticks of 6% in FY23 and 9% in FY24. Below is a chart illustrating the company’s revenue on an annual basis.
Image Source: Zacks Investment Research
Visa
A multinational financial services company and a Zacks Rank #2 (Buy), Visa facilitates electronic funds transfers through Visa-branded debit, credit, and prepaid cards.
Visa posted a strong quarter in its latest release, exceeding the Zacks Consensus EPS Estimate by more than 8% and reporting revenue 3.4% above expectations.
The market was certainly pleased with the results, sending shares on an upward trajectory. This is illustrated by the green arrow in the chart below.
Image Source: Zacks Investment Research
In addition, Visa shares provide an income stream; V’s annual dividend currently yields 0.8%, a tick below the Zacks Business Services sector average.
Impressively, the company’s payout has grown by more than 15% over the last five years.
Image Source: Zacks Investment Research
And for the cherry on top, Visa is a cash-generating machine; V reported free cash flow of $3.9 billion in its latest release.
Image Source: Zacks Investment Research
Stryker Corp.
Stryker is a medical device company operating in the global orthopedic market. Like the stocks above, SYK sports a Zacks Rank #2 (Buy).
Shares got a big boost following Stryker’s latest quarterly release. The company posted earnings of $3.00 per share, nearly 6% above expectations.
Quarterly revenue totaled $5.2 billion, 5% ahead of estimates and growing 10.7% year-over-year.
Image Source: Zacks Investment Research
Similar to V, Stryker shares pay a dividend, currently yielding 1.1% annually. While the yield is below the Zacks Medical sector average, SYK’s 10% five-year annualized dividend growth rate picks up the slack.
Image Source: Zacks Investment Research
Bottom Line
With an upcoming jobs report and investors digesting Powell’s testimony, it’s reasonable to expect a heightened level of volatility throughout the week.
In uncertain times, low-beta stocks, including Fiserv , Visa (V - Free Report) , and Stryker (SYK - Free Report) , can help shield investors from spooky price swings.
In addition to being low-beta, all three sport a favorable Zacks Rank, indicating an optimistic near-term outlook.
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Navigating Volatility: 3 Stocks Worthy of Consideration
Following a mixed session yesterday, investors remain focused on Jerome Powell’s testimony.
Needless to say, all are seeking clarification as we try to wade through a highly-unique economic backdrop and a year-long tightening campaign.
Powell believes returning to bigger rate hikes could be necessary if data suggests the U.S. economy is heating up again.
It’s worth noting that the Fed opted for a 25bps hike in its latest meeting, a step down from the prior 50bps hike in December and the 75bps hikes we saw in 2022.
And the market reacted to these comments accordingly, with stocks witnessing adverse price action in response.
During times of heightened uncertainty, targeting low-beta stocks can provide a valuable shield to the broader market’s movements.
Three low-beta stocks – Fiserv , Visa (V - Free Report) , and Stryker (SYK - Free Report) – could all be considerations for investors seeking heightened portfolio defense.
The chart below illustrates the performance of all three stocks year-to-date, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a closer look at each one.
Fiserv
Fiserv is a global fintech and payments company with solutions for banking, global commerce, merchant acquiring, billing and payments, and point-of-sale. The stock presently carries a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
Fiserv’s valuation multiples don’t appear stretched, with the current 16.1X forward earnings multiple sitting well beneath the 22.5X five-year median and the Zacks Business Services sector average.
Image Source: Zacks Investment Research
In addition, it’s hard to ignore the company’s growth trajectory, with estimates suggesting 12.6% year-over-year earnings growth in its current fiscal year (FY23) and a further 14% in FY24.
The projected earnings growth comes on top of forecasted year-over-year revenue upticks of 6% in FY23 and 9% in FY24. Below is a chart illustrating the company’s revenue on an annual basis.
Image Source: Zacks Investment Research
Visa
A multinational financial services company and a Zacks Rank #2 (Buy), Visa facilitates electronic funds transfers through Visa-branded debit, credit, and prepaid cards.
Visa posted a strong quarter in its latest release, exceeding the Zacks Consensus EPS Estimate by more than 8% and reporting revenue 3.4% above expectations.
The market was certainly pleased with the results, sending shares on an upward trajectory. This is illustrated by the green arrow in the chart below.
Image Source: Zacks Investment Research
In addition, Visa shares provide an income stream; V’s annual dividend currently yields 0.8%, a tick below the Zacks Business Services sector average.
Impressively, the company’s payout has grown by more than 15% over the last five years.
Image Source: Zacks Investment Research
And for the cherry on top, Visa is a cash-generating machine; V reported free cash flow of $3.9 billion in its latest release.
Image Source: Zacks Investment Research
Stryker Corp.
Stryker is a medical device company operating in the global orthopedic market. Like the stocks above, SYK sports a Zacks Rank #2 (Buy).
Shares got a big boost following Stryker’s latest quarterly release. The company posted earnings of $3.00 per share, nearly 6% above expectations.
Quarterly revenue totaled $5.2 billion, 5% ahead of estimates and growing 10.7% year-over-year.
Image Source: Zacks Investment Research
Similar to V, Stryker shares pay a dividend, currently yielding 1.1% annually. While the yield is below the Zacks Medical sector average, SYK’s 10% five-year annualized dividend growth rate picks up the slack.
Image Source: Zacks Investment Research
Bottom Line
With an upcoming jobs report and investors digesting Powell’s testimony, it’s reasonable to expect a heightened level of volatility throughout the week.
In uncertain times, low-beta stocks, including Fiserv , Visa (V - Free Report) , and Stryker (SYK - Free Report) , can help shield investors from spooky price swings.
In addition to being low-beta, all three sport a favorable Zacks Rank, indicating an optimistic near-term outlook.