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5 Stocks Your Portfolio Must Have Amid Persisting Volatility
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U.S. stock markets are in the grip of volatility once again. Wall Street has suffered a bloody blow this year. However, markets witnessed a bear market relief rally from mid-June to mid-August, which eventually evaporated owing to a record-high inflation rate and an extremely high interest rate regime and tighter monetary control adopted by the Fed.
Wall Street has again seen an impressive rally since mid-October. A less-than-expected inflation rate in October with respect to several measures along with a dovish comment from Fed Chairman Jerome Powell in November boosted investors’ confidence in risky assets like equities.
However, hotter-than-expected job additions and a higher wage rate in November once again dampened the mood on Wall Street. Market participants are now unsure whether the Fed will reduce the magnitude of the interest rate hike in the December FOMC meeting, as indicated by Powell, or will hike the rate by 75 basis points for the fifth time in a row.
A tight labor market is being perceived as a pushback from the Fed’s recent stance of trying to reassure the markets that it would slacken its stringent policy measures to avoid a hard-landing of the economy.
Market participants are not sure whether the terminal interest for this round of monetary tightening will stay within the 5% threshold or go beyond that. A section of economists and financial experts are concerned that a higher interest rate will lead to a recession in 2023.
Stock Selection Process
Wall Street is likely to remain volatile in the near future as market participants are waiting for highly important consumer price index data for November and the Fed’s December FOMC policy decisions. Retail sales and industrial production data for November are also slated to be released next week.
At this stage, investment in low-beta stocks with a high dividend yield and a favorable Zacks Rank may be the best option. If the markets regain momentum, the favorable Zacks Rank of these stocks will capture the upside potential. However, if the downtrend continues, low-beta stocks will minimize portfolio losses and dividend payment will act as a regular income stream.
We have narrowed our search to five large-cap (market capital > $10 billion) stocks that have popped over 25% year to date with more upside left. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Archer-Daniels-Midland Co. (ADM - Free Report) has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, aided by significant gains in the Human and Animal Nutrition units, remains the key growth driver.
Archer-Daniels-Midland expects the nutrition segment to record operating profit growth of 20% in 2022. The company has been significantly progressing on its three strategic pillars — optimize, drive and growth.
Archer-Daniels-Midland has an expected earnings growth rate of 5.3% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 12.9% over the last 60 days. The stock price of ADM has surged 34.4% year to date. It has a current dividend yield of 1.78% and a beta of 0.84
LPL Financial Holdings Inc. (LPLA - Free Report) has been benefiting from strategic acquisitions, including the buyout of Waddell & Reed's wealth management business. Solid advisor productivity and recruiting efforts are expected to keep aiding the advisory revenues of LPLA. Moreover, LPL Financial's efficient capital deployment activities reflect a solid balance sheet position.
LPL Financial has an expected earnings growth rate of more than 100% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 10.6% over the last 60 days. The stock price of LPLA has jumped 41.8% year to date. It has a current dividend yield of 0.45% and a beta of 0.90.
W. R. Berkley Corp. (WRB - Free Report) has been benefiting from its insurance business, performing well on the increase in premiums written over the past many years. WRB has been investing in numerous startups since 2006 and has established new units in growing international markets.
W. R. Berkley’s international business is poised for growth supported by emerging markets. WRB’s solid capital position enables capital deployment. Investment in alternative assets should improve investment income going forward.
W. R. Berkley has an expected earnings growth rate of 3.9% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 1% over the last 60 days. The stock price of WRB has climbed 37.3% year to date. It has a current dividend yield of 0.54% and a beta of 0.63.
Sociedad Química y Minera de Chile S.A. (SQM - Free Report) produces and distributes lithium and its derivatives. SQM offers lithium carbonates for various applications that include electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-resistant glass, air conditioning chemicals, continuous casting powder for steel extrusion, primary aluminum smelting process and pharmaceuticals.
Sociedad Química sells lithium derivatives and is an ingredient in the manufacturing of gunpowder. Further, SQM supplies lithium hydroxide for the lubricating greases industry, as well as cathodes for batteries.
Sociedad Química has an expected earnings growth rate of more than 100% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 7.3% over the last 30 days. The stock price of SQM has soared 86.4% year to date. It has a current dividend yield of 5.06% and a beta of 0.85.
Globe Life Inc. (GL - Free Report) provides various life and supplemental health insurance products, and annuities to lower-middle to middle-income households in the United States. GL operates through four segments: Life Insurance, Supplemental Health Insurance, Annuities, and Investments.
Globe Life offers whole life, term life, and other life insurance products, Medicare supplement and supplemental health insurance, such as critical illness and accident plans, and single-premium and flexible-premium deferred annuities.
Globe Life has an expected earnings growth rate of 28.2% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 0.1% over the last 30 days. The stock price of GL has advanced 27.2% year to date. It has a current dividend yield of 0.70% and a beta of 0.84.
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5 Stocks Your Portfolio Must Have Amid Persisting Volatility
U.S. stock markets are in the grip of volatility once again. Wall Street has suffered a bloody blow this year. However, markets witnessed a bear market relief rally from mid-June to mid-August, which eventually evaporated owing to a record-high inflation rate and an extremely high interest rate regime and tighter monetary control adopted by the Fed.
Wall Street has again seen an impressive rally since mid-October. A less-than-expected inflation rate in October with respect to several measures along with a dovish comment from Fed Chairman Jerome Powell in November boosted investors’ confidence in risky assets like equities.
However, hotter-than-expected job additions and a higher wage rate in November once again dampened the mood on Wall Street. Market participants are now unsure whether the Fed will reduce the magnitude of the interest rate hike in the December FOMC meeting, as indicated by Powell, or will hike the rate by 75 basis points for the fifth time in a row.
A tight labor market is being perceived as a pushback from the Fed’s recent stance of trying to reassure the markets that it would slacken its stringent policy measures to avoid a hard-landing of the economy.
Market participants are not sure whether the terminal interest for this round of monetary tightening will stay within the 5% threshold or go beyond that. A section of economists and financial experts are concerned that a higher interest rate will lead to a recession in 2023.
Stock Selection Process
Wall Street is likely to remain volatile in the near future as market participants are waiting for highly important consumer price index data for November and the Fed’s December FOMC policy decisions. Retail sales and industrial production data for November are also slated to be released next week.
At this stage, investment in low-beta stocks with a high dividend yield and a favorable Zacks Rank may be the best option. If the markets regain momentum, the favorable Zacks Rank of these stocks will capture the upside potential. However, if the downtrend continues, low-beta stocks will minimize portfolio losses and dividend payment will act as a regular income stream.
We have narrowed our search to five large-cap (market capital > $10 billion) stocks that have popped over 25% year to date with more upside left. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Archer-Daniels-Midland Co. (ADM - Free Report) has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, aided by significant gains in the Human and Animal Nutrition units, remains the key growth driver.
Archer-Daniels-Midland expects the nutrition segment to record operating profit growth of 20% in 2022. The company has been significantly progressing on its three strategic pillars — optimize, drive and growth.
Archer-Daniels-Midland has an expected earnings growth rate of 5.3% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 12.9% over the last 60 days. The stock price of ADM has surged 34.4% year to date. It has a current dividend yield of 1.78% and a beta of 0.84
LPL Financial Holdings Inc. (LPLA - Free Report) has been benefiting from strategic acquisitions, including the buyout of Waddell & Reed's wealth management business. Solid advisor productivity and recruiting efforts are expected to keep aiding the advisory revenues of LPLA. Moreover, LPL Financial's efficient capital deployment activities reflect a solid balance sheet position.
LPL Financial has an expected earnings growth rate of more than 100% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 10.6% over the last 60 days. The stock price of LPLA has jumped 41.8% year to date. It has a current dividend yield of 0.45% and a beta of 0.90.
W. R. Berkley Corp. (WRB - Free Report) has been benefiting from its insurance business, performing well on the increase in premiums written over the past many years. WRB has been investing in numerous startups since 2006 and has established new units in growing international markets.
W. R. Berkley’s international business is poised for growth supported by emerging markets. WRB’s solid capital position enables capital deployment. Investment in alternative assets should improve investment income going forward.
W. R. Berkley has an expected earnings growth rate of 3.9% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 1% over the last 60 days. The stock price of WRB has climbed 37.3% year to date. It has a current dividend yield of 0.54% and a beta of 0.63.
Sociedad Química y Minera de Chile S.A. (SQM - Free Report) produces and distributes lithium and its derivatives. SQM offers lithium carbonates for various applications that include electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-resistant glass, air conditioning chemicals, continuous casting powder for steel extrusion, primary aluminum smelting process and pharmaceuticals.
Sociedad Química sells lithium derivatives and is an ingredient in the manufacturing of gunpowder. Further, SQM supplies lithium hydroxide for the lubricating greases industry, as well as cathodes for batteries.
Sociedad Química has an expected earnings growth rate of more than 100% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 7.3% over the last 30 days. The stock price of SQM has soared 86.4% year to date. It has a current dividend yield of 5.06% and a beta of 0.85.
Globe Life Inc. (GL - Free Report) provides various life and supplemental health insurance products, and annuities to lower-middle to middle-income households in the United States. GL operates through four segments: Life Insurance, Supplemental Health Insurance, Annuities, and Investments.
Globe Life offers whole life, term life, and other life insurance products, Medicare supplement and supplemental health insurance, such as critical illness and accident plans, and single-premium and flexible-premium deferred annuities.
Globe Life has an expected earnings growth rate of 28.2% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 0.1% over the last 30 days. The stock price of GL has advanced 27.2% year to date. It has a current dividend yield of 0.70% and a beta of 0.84.