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3 Low-Beta Defensive Stocks to Buy as Inflation Continues to Surge
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Key Takeaways
Inflation rose in September, with CPI up 3.7% year over year, raising concerns about Fed rate hikes.
CAH and UNH offer low betas of 0.50 and 0.60, with expected earnings growth of 11.5% and 21.4%.
CORT has a 0.40 beta, over 100% expected earnings growth and a 64.6% upward revision in earnings estimates.
Inflation rose sharply in September as prices of consumer goods jumped at a rapid pace. A surge in oil prices, owing to the ongoing tensions in the Middle East, has led to a steep rise in the cost of goods and services.
This also gives the Federal Reserve ample reasons to go for another interest rate hike as early as this month. Persistent high inflation has also raised fresh fears of an economic slowdown.
Given this situation, it would be ideal to invest in low-beta defensive stocks from the healthcare sector, namely, Cardinal Health, Inc. (CAH - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) , and Corcept Therapeutics Incorporated (CORT - Free Report) .
Inflation Surges Further
The consumer price index (CPI) rose 0.6% sequentially in September, after climbing 0.4% in the previous month, the Commerce Department reported on Wednesday. The monthly rise in inflation came in line with analysts’ expectations.
Year over year, CPI rose 3.7% in September after advancing 3.4% in August. Core CPI, which excludes the volatile food and energy components, increased 0.3% sequentially in September, higher than the consensus estimate of a rise of 0.2%.
On a year-over-year basis, core CPI increased 2.6% in September after increasing 2.4%, in the prior month.
The jump in September CPI was primarily fueled by a 9.1% surge in gasoline prices. Diesel prices increased 11.9% in September and were up 60.9% from year-ago levels. Grocery prices surged 1.8% in September from the year-ago levels.
Grocery prices climbed 1.8% year over year in September. The jump in core CPI was led by a 0.4% rise in the cost of shelter.
The Middle East crisis has resulted in a steep rise in energy costs, pushing up prices of goods, services, and transportation. Airline fares jumped 1.2% in September. This has seen inflation climb sharply over the past six months after declining substantially last year.
Inflation now remains sharply above the Fed’s 2% target. The Federal Reserve hiked interest rates by a quarter percentage point in its September policy meeting. Markets have been expecting the central bank to hike interest rates by another quarter percentage point in December.
However, the latest CPI inflation now gives the Fed enough scope to raise interest rates as early as this month. Higher interest rates mean higher borrowing costs, which could impact consumer spending.
3 Low-Beta Healthcare Stocks With Upside
Cardinal Health
Cardinal Health, Inc. is one of the world’s largest healthcare services and products providers, operating across Pharmaceutical & Specialty Solutions, Global Medical Products & Distribution, and Other growth businesses. CAH serves nearly 90% of U.S. hospitals, delivers more than 43,000 pharmaceutical shipments daily, and manages a broad portfolio of medical, surgical, and laboratory products.
Cardinal Health has an expected earnings growth rate of 11.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 60 days. Cardinal Health has a beta of 0.50 and a current dividend yield of 0.86%. CAH currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UnitedHealth Group
UnitedHealth Group Incorporated provides a wide range of health care products and services, such as health maintenance organizations, point-of-service plans, preferred provider organizations and managed fee-for-service programs. UNH has the largest and most diverse membership base within the managed-care organization market, which gives it significant competitive advantages.
UnitedHealth Group has an expected earnings growth rate of 21.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 60 days. UNH currently carries a Zacks Rank #2. UnitedHealth Group has a beta of 0.60 and a current dividend yield of 2.46%.
Corcept Therapeutics Incorporated
Corcept Therapeutics Incorporated is focused on the discovery, development and commercialization of drugs for the treatment of severe metabolic, psychiatric and oncology disorders, which are associated with the activity of the hormone cortisol, also known as the stress hormone.
Corcept Therapeutics has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 64.6% over the past 60 days. CORT sports a Zacks Rank #1. Corcept Therapeutics has a beta of 0.40.
View the Zacks #1 Rank List
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3 Low-Beta Defensive Stocks to Buy as Inflation Continues to Surge
Key Takeaways
Inflation rose sharply in September as prices of consumer goods jumped at a rapid pace. A surge in oil prices, owing to the ongoing tensions in the Middle East, has led to a steep rise in the cost of goods and services.
This also gives the Federal Reserve ample reasons to go for another interest rate hike as early as this month. Persistent high inflation has also raised fresh fears of an economic slowdown.
Given this situation, it would be ideal to invest in low-beta defensive stocks from the healthcare sector, namely, Cardinal Health, Inc. (CAH - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) , and Corcept Therapeutics Incorporated (CORT - Free Report) .
Inflation Surges Further
The consumer price index (CPI) rose 0.6% sequentially in September, after climbing 0.4% in the previous month, the Commerce Department reported on Wednesday. The monthly rise in inflation came in line with analysts’ expectations.
Year over year, CPI rose 3.7% in September after advancing 3.4% in August. Core CPI, which excludes the volatile food and energy components, increased 0.3% sequentially in September, higher than the consensus estimate of a rise of 0.2%.
On a year-over-year basis, core CPI increased 2.6% in September after increasing 2.4%, in the prior month.
The jump in September CPI was primarily fueled by a 9.1% surge in gasoline prices. Diesel prices increased 11.9% in September and were up 60.9% from year-ago levels. Grocery prices surged 1.8% in September from the year-ago levels.
Grocery prices climbed 1.8% year over year in September. The jump in core CPI was led by a 0.4% rise in the cost of shelter.
The Middle East crisis has resulted in a steep rise in energy costs, pushing up prices of goods, services, and transportation. Airline fares jumped 1.2% in September. This has seen inflation climb sharply over the past six months after declining substantially last year.
Inflation now remains sharply above the Fed’s 2% target. The Federal Reserve hiked interest rates by a quarter percentage point in its September policy meeting. Markets have been expecting the central bank to hike interest rates by another quarter percentage point in December.
However, the latest CPI inflation now gives the Fed enough scope to raise interest rates as early as this month. Higher interest rates mean higher borrowing costs, which could impact consumer spending.
3 Low-Beta Healthcare Stocks With Upside
Cardinal Health
Cardinal Health, Inc. is one of the world’s largest healthcare services and products providers, operating across Pharmaceutical & Specialty Solutions, Global Medical Products & Distribution, and Other growth businesses. CAH serves nearly 90% of U.S. hospitals, delivers more than 43,000 pharmaceutical shipments daily, and manages a broad portfolio of medical, surgical, and laboratory products.
Cardinal Health has an expected earnings growth rate of 11.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 60 days. Cardinal Health has a beta of 0.50 and a current dividend yield of 0.86%. CAH currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UnitedHealth Group
UnitedHealth Group Incorporated provides a wide range of health care products and services, such as health maintenance organizations, point-of-service plans, preferred provider organizations and managed fee-for-service programs. UNH has the largest and most diverse membership base within the managed-care organization market, which gives it significant competitive advantages.
UnitedHealth Group has an expected earnings growth rate of 21.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 60 days. UNH currently carries a Zacks Rank #2. UnitedHealth Group has a beta of 0.60 and a current dividend yield of 2.46%.
Corcept Therapeutics Incorporated
Corcept Therapeutics Incorporated is focused on the discovery, development and commercialization of drugs for the treatment of severe metabolic, psychiatric and oncology disorders, which are associated with the activity of the hormone cortisol, also known as the stress hormone.
Corcept Therapeutics has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 64.6% over the past 60 days. CORT sports a Zacks Rank #1. Corcept Therapeutics has a beta of 0.40.