3 Low-Volatility Stocks to Invest in Right Now
U.S. GDP declined for the second straight quarter from April to June, adding to the recession concerns. Moreover, considering the lingering macroeconomic headwinds, we think it could be wise to...
U.S. GDP declined for the second straight quarter from April to June, adding to the recession concerns. Moreover, considering the lingering macroeconomic headwinds, we think it could be wise to scoop up shares of low-volatility stocks Leidos (LDOS), Incyte (INCY), and The Coca-Cola Company (KO) now. Keep reading….
Supply chain disruptions, the geopolitical crisis, soaring inflation, and the Fed's aggressive interest rate hikes are raising the possibilities of a recession. Moreover, the U.S. GDP contracted in the second quarter, marking the second straight quarterly decline. According to TD Securities, there is more than a 50% chance of a U.S. recession within the next 18 months.
On the other hand, Jeffrey Roach, chief economist for LPL Financial, said, "A slowdown has to be significant, broad, and sustained before it qualifies as a recession. Currently, the economy is downshifting to a much slower growth path, but the decline in economic activity is not "significant' in our view."
Nonetheless, market volatility is rife, as is evident from the CBOE Volatility Index's 27.6% year-to-date gains. Consequently, rising investors' interest in low-volatility stocks is palpable from the Invesco S&P 500 Low Volatility ETF's (SPLV) 2.1% gains over the past month.
Leidos Holdings, Inc. (LDOS)
LDOS and its subsidiaries provide services and solutions in the defense, intelligence, civil, and health markets in the United States and internationally. It operates through three segments- Defense Solutions; Civil; and Health. It has a beta of 0.72.
On August 2, 2022, LDOS entered into a definitive agreement with Cobham Limited to acquire Cobham Aviation Services Australia's Special Mission business. This acquisition is expected to diversify LDOS' portfolio and improve business prospects.
LDOS' revenues increased 4.3% year-over-year to $3.60 billion for the second quarter ended July 1, 2022. Its net income increased marginally year-over-year to $172 million. Also, its non-GAAP EPS came in at $1.59, up 4.6% year-over-year, while its adjusted EBITDA increased marginally year-over-year to $366 million.
For 2023, analysts expect LDOS' revenue to be $14.93 billion, representing a 5.2% year-over-year rise. In addition, the company's EPS is expected to increase 10.5% year-over-year to $7.16 in 2023. It surpassed EPS estimates in three of the trailing four quarters. The stock has gained 12.4% year-to-date to close the last trading session at $99.94.
LDOS' POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its weighting.
Also, the stock has a B grade for Value and Stability. Within the Technology – Services industry, it is ranked #11 out of 81 stocks. Click here to see the additional POWR Ratings for Growth, Momentum, Sentiment, and Quality for LDOS.
Incyte Corporation (INCY)
Biopharmaceutical company INCY focuses on discovering, developing, and commercializing proprietary therapeutics in the United States and internationally. Its product portfolio includes JAKAFI, PEMAZYRE, and ICLUSIG. It has a 0.66 beta.
On July 19, 2022, the U.S. Food and Drug Administration approved INCY's Opzelura™ (ruxolitinib) cream 1.5% for the topical treatment of non-segmental vitiligo in adult and pediatric patients more than equal to 12 years of age. This is a big leap forward in treating vitiligo, and INCY should benefit from it.
Moreover, on June 13, 2022, The U.S. Food and Drug Administration approved INCY and Eli Lilly and Company's (LLY) OLUMIANT (baricitinib) pill, a first-in-disease systemic treatment for adults with severe alopecia areata. This breakthrough pill, which has shown tremendous promise in clinical trials, is a milestone achievement and should garner significant returns for the company.
For the second quarter ended June 30, 2022, INCY's total revenues came in at $911.40 million, up 29.1% year-over-year. Its non-GAAP net income came in at $226.35 million, up 26.6% year-over-year, while its non-GAAP EPS came in at $1.01, up 26.3% year-over-year.
Analysts expect INCY's revenue to increase 15.6% year-over-year to $3.92 billion in 2023. Its EPS is expected to increase 43.7% year-over-year to $4.60 in 2023. Over the past nine months, the stock has gained 8.6% to close the last trading session at $72.54.
It's no surprise that INCY has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Value, Sentiment, and Quality.
The Coca-Cola Company (KO)
Beverage company, KO, manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks; flavored and enhanced water, sports drinks; juice, dairy, plant-based drinks; tea and coffee; and energy drinks. It has a beta of 0.56.
On June 13, 2022, KO and Brown-Forman Corporation announced their global partnership to launch the iconic Jack & Coke cocktail as a branded, ready-to-drink pre-mixed cocktail. This partnership aims to offer consumers a surreal taste experience combining two of America's greatest beverage classics. The new product is expected to gain a significant market share in no time, given the brand's popularity.
KO's net operating revenues increased 11.8% year-over-year to $11.32 billion for the second quarter ended July 1, 2022. Its gross profit came in at $6.50 billion, up 2.4% year-over-year. Moreover, its non-GAAP net income came in at $3.06 billion, up 4.4% year-over-year.
For fiscal 2022, analysts expect KO's revenue to be $42.13 billion, representing a 9% year-over-year rise. In addition, the company's EPS is expected to grow 6.5% year-over-year to $2.47 in 2022. It surpassed EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 12.3% to close the last trading session at $63.92.
KO's overall B rating equates to a Buy in our POWR Ratings system. Also, the stock has a B grade for Stability and Quality.
LDOS shares were trading at $100.17 per share on Thursday morning, up $0.23 (+0.23%). Year-to-date, LDOS has gained 13.49%, versus a -12.30% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
Entrepreneur Editors' Picks
This Founder Quit His 'Prison'-Like Teaching Job Within 2 Months. Now, He and His Sister Are Helping Other Teachers Leave the Classroom and Achieve Financial Freedom.
If You Focus on Problems, You'll Only Find More Problems. Here's How to Focus on Solutions.
Facing More Than 15 Years in Prison, This Founder Transformed His Hustle Into a Powerful Personal Brand and Business. Now, He's Giving Back in a Big Way.
Apple Asks This Jarring Interview Question as a Secret Way to Evaluate a Candidate