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4 Low Beta Consumer Staples Stocks for a Risky October

FDP SYY TSN SAFM

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The month of September was quite volatile for investors and ended with turbulent events like the debate between Donald Trump and Hillary Clinton for the U.S. Presidential election 2016, along with a sudden surge in oil prices. Meanwhile, uncertainties surrounding the Fed rate hike are expected to aggravate the concerns.

Elections to Spur Volatility

Elections have traditionally been a significant driver of stock market volatility and this time too, it will be no different. The first debate between Hillary Clinton and Donald Trump for the White House that occurred last week was quite a heated one, and included discussions about various sectors, alongside some sensitive topics. As a result, investors must gear up for an extremely volatile October ahead of the Presidential elections.

Surge in Oil Prices

Recently, the members of Organization of the Petroleum Exporting Countries (OPEC) decided to curb the output for the first time in eight years, which led to a rebound in oil prices, in turn having a mixed effect on the global economy. While the energy sector got a boost from the news, the surge in oil prices hurt the airline and consumers stocks.

A rise in gas prices is always a pain for consumers, who change their spending pattern accordingly. They become more cautious and try to curb non-essential spending, such as dining out or going for a vacation.

Further, with the stage all set for the third-quarter earnings season, investors’ anxiety is at its peak as to how the quarter will unfold amid mixed economic data, thus fueling market speculations.

The Winning Strategy

Amid such a backdrop, investing in the consumer staples stocks is safe because of their defensive nature. The consumer staples sector has managed to perform fairly well in the past few months, buoyed by rising consumer confidence and an improving economy.

Consumer confidence – a key determinant of the economy’s health – surged for the second consecutive month in September and is now at its highest level since the recession, indicating that the economy is on the recovery path. The consumer confidence index, which had increased to 101.8 in August, further improved in September and now stands at 104.1. The index surged as consumers expect a positive view of the labor market. Given an improving labor market, we expect consumer spending to pick up.

Though experts believe the economy is reviving, low risk investors should be very careful about their strategy.

Safeguard Your Portfolio

A time-tested way to earn stable returns in the face of prevailing economic conditions is to invest in low-beta stocks. Beta measures the volatility or risk of a particular asset in comparison to the market. In other words, beta measures the extent of a security’s price movement relative to the market. So, investors should go with low-beta stocks, which are inherently less volatile than the markets they trade in. In this case, a low beta ranges from 0 to 1.

We have selected four low-beta consumer staples stocks (beta less than 0.75) that boast a Zacks Rank #1 (Strong Buy) or #2 (Buy). The search was also narrowed down with a Value score of ‘A.’

Value stocks offer an opportunity to buy a stock that is currently undervalued by the market. We think investing in these stocks could actually be a safer bet, given their inclination for steady growth and momentum in price.

4 Prominent Picks to Buy Now

Starting with the Coral Gables, FL-based Fresh Del Monte Produce Inc. (FDP - Free Report) , this Zacks Rank #1 stock has a beta of 0.42. Also, Fresh Del Monte, a world leader in the production, distribution and marketing of fresh produce, has witnessed an uptrend in estimates for full-year 2016, over the last 60 days. Adding further to its inherent strength story, the company currently possesses a Value score of ‘A’ and has posted positive earnings surprises in the last two consecutive quarters.

Investors can also count on food company Sysco Corp. (SYY - Free Report) with a beta as low as 0.56 and a long-term growth rate of 8.83%. The company not only flaunts an impressive earnings surprise history in the past four quarters, but its positive estimate revisions for fiscal 2017 and fiscal 2018 over the past two months also instill confidence among investors. This Houston, TX-based company can be a perfect fit for investors’ portfolio, armed with a value score of ‘A’ and a Zacks Rank #2.

You can see the complete list of today’s Zacks #1 Rank stocks here.

To satiate investors’ appetite further, we suggest investing in Sanderson Farms, Inc. (SAFM - Free Report) . Headquartered in Laurel, MS, this Zacks Rank #1 company processes and markets fresh, frozen, and prepared chicken products in the U.S. The company’s solid earnings surprise history and favorable estimate revisions for fiscal 2016 and fiscal 2017 over the past 30 days, highlight its solid prospects.

Not enough? Take a look at its value score of ‘A’ and beta of 0.05, and you will be sure to add this meat company to your portfolio.

Another meat company that warrants a look is Tyson Foods, Inc. (TSN - Free Report) , with a long term earnings growth rate of 11%. This Springdale, AR-based company sports a Zacks Rank #1 and a value score of ‘A.’ The stock has not been a disappointment, as is evident from its average trailing four-quarter earnings surprise of 12.24%. Further, the stock’s beta of 0.26 is likely to shield it from the market tussles. Tyson Foods also showcases upward revisions in its estimates for fiscal 2016 and 2017 over the past 60 days – making it a solid bet.

So, it’s time you book your profits, by placing your money in these safe havens.

You can also use the Zacks Stock Screener to find other stocks with this winning combination. Investors can confidently end their search at stocks with a favorable Zacks Rank of either #1 or #2, which encompasses its strong fundamentals, promises price movement and highlights analysts’ constructive view on the same via positive estimate revisions. A sturdy portfolio always gives favorable returns.

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In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

FRESH DEL MONTE (FDP) - free report >>

SYSCO CORP (SYY) - free report >>

TYSON FOODS A (TSN) - free report >>

SANDERSON FARMS (SAFM) - free report >>