The first six months of 2021 have been way better than the first half of 2020, which had been marred by the coronavirus pandemic. The S&P 500 jumped 15% in the first half of this year despite inflationary pressures.
But investors, regrettably, need to deal with a serious concern in the second half of 2021. Of course, it’s not the rise in prices of commodities sooner or later leading to higher interest rates. It’s actually the spread of the delta variant of coronavirus, which now is threatening to derail the economic recovery that began in the first half of the year.
The delta variant is known to be highly transmissible. In the United States, the daily average new cases of the delta variant are now above 100,000 for the first time since the month of February, citing a
MarketWatch article. In fact, on Aug 8, the seven-day average of the new cases of the delta variant in the United States was 110,360, per New York Times tracker, as mentioned in the MarketWatch article. Alarmingly, hospitalization rates at present have now climbed 90%, while deaths have also risen in the period.
Interestingly, most of the rise in the delta variant cases, an uptick in hospitalization and deaths are actually taking place in unvaccinated areas. Notably, places like Texas have seen a surge in hospitalization rates, raising concerns among employees returning to the office as well as children returning to classrooms. In fact, the continued spread of the more contagious variant of coronavirus has raised worries of another round of shutdown measures by the government, hampering economic growth and squeezing corporate profits.
The spread of the delta variant, by the way, easily overshadowed strong labor market data. The Fed was anticipating further progress in the labor market, and July’s encouraging employment data didn’t disappoint the central bank. Citing another
MarketWatch article, the labor department stated that 943,000 new jobs were added to the economy in the month of July, and the jobless rate dropped from 5.9% to 5.4%. However, surging delta variant cases dampened enthusiasm surrounding labor market data, and squashed any bullish sentiments in Wall Street. After all, the S&P 500 couldn’t find any impetus to push itself further into record territory. Instead, the broader index ended in the red on Aug 9.
But despite such concerns about the spread of the delta variant and its ill effects on the stock market, investors shouldn’t shun equities completely. Instead, investors should focus on low-risk assets and a blend of parameters that lead to better returns in the near future. Thus, it’s imperative to create a portfolio of low-beta stocks that ranges from 0 to 1.
Moreover, the stocks need to be solid dividend payers, which indicates immense financial strength. At the same time, such stocks need to be non-cyclical or whose activities aren’t correlated to the broader market. In a way, they are immune to market vagaries. Such stocks invariably come from the consumer staples and utility sectors. We have, thus, selected four such stocks that boast a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. J & J Snack Foods Corp. ( JJSF Quick Quote JJSF - Free Report) is an American manufacturer, marketer, and distributor of branded niche snack foods and frozen beverages. The company has a beta of 0.58 and a Zacks Rank #2. It has a dividend yield of 1.6%, while its five-year average dividend yield is 1.4%. The Zacks Consensus Estimate for its current-year earnings has moved up 23.6% over the past 60 days. The company’s expected earnings growth rate for the current year is almost 164%. Carriage Services, Inc. ( CSV Quick Quote CSV - Free Report) is a leading provider of death care services and products in the United States. The company has a beta of 0.82 and a Zacks Rank #1. It has a dividend yield of nearly 1.1%, while its five-year average dividend yield is 1.2%. The Zacks Consensus Estimate for its current-year earnings has moved up 6.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 43%. Middlesex Water Company ( MSEX Quick Quote MSEX - Free Report) treats, stores and distributes water for residential, commercial, industrial and fire prevention purposes. The company has a beta of 0.31 and a Zacks Rank #2. It has a dividend yield of 1%, while its five-year average dividend yield is 1.9%. The Zacks Consensus Estimate for its current-year earnings has moved up 0.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 4.1%. California Water Service Group ( CWT Quick Quote CWT - Free Report) is the third largest investor-owned water utility in the United States. The company has a beta of 0.14 and a Zacks Rank #2. It has a dividend yield of 1.4%, while its five-year average dividend yield is 1.8%. The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 60 days. The company’s expected earnings growth rate for the next quarter and year is 12.9% and 4%, respectively.