Fears gripped Wall Street again on the first trading day of December, with investors selling off riskier assets. Volatility has been a persistent feature in markets for some time, as multiple factors continue to erode investors’ sentiment.
A slowing economy, supported by weak economic data, and a lack of clarity over the Federal Reserve’s monetary policy for the coming year, are further unsettling investors.
Given this situation, investors may want to focus on low-beta, defensive stocks — especially from the consumer staples sector — to help cushion against market swings. Companies like The Vita Coco Company, Inc. COCO, Monster Beverage Corporation MNST and Service Corporation International SCI fit this category. Each of these stocks carries a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
These stocks are from the low-beta category (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high dividend yield and a favorable Zacks Rank.
Market Turmoil Continues
Investors have lately been concerned about the prospect of AI stocks. Tech companies, led by AI-focused stocks, had been driving the market rally for months. However, a spate of blockbuster deals and massive investments has raised concerns over the sky-high valuation of AI stocks.
Investors are now concerned that AI may also be a bubble that will eventually burst. This has seen investors shunning riskier assets and taking shelter in safe-haven stocks. On Monday, tech stocks took a hit once again, which was intensified further by a slump in cryptocurrencies, another riskier zone.
Bitcoin, the world’s most popular cryptocurrency, fell nearly 6% to trade below $86,000, recording its worst day since March. Bitcoin has now declined more than 30% from its all-time high, attained less than two months ago.
Macroeconomic Factors Weighing on Markets
Inflationary pressures have been weighing on the economy, with several sectors shrinking. Economic activity in the manufacturing sector shrank further in November. The ISM Manufacturing PMI fell to 48.2% in November, declining for the ninth straight month.
Inflation, which fell sharply last year, has remained elevated for most of this year and is still above the Federal Reserve’s 2% target. President Donald Trump’s tariffs have largely been responsible for the price rises in recent months, which have now posed a major challenge for the Federal Reserve in fighting inflation.
Also, a shrinking labor market and a lack of clarity over the Federal Reserve’s future rate cut path have been worrying investors.
3 Low-Beta Consumer Staple Stocks With Upside
The Vita Coco Company
The Vita Coco Company, Inc. provides a beverage platform. COCO’s brands include coconut water, Vita Coco; clean energy drink Runa; sustainable enhanced water, Ever & Ever and protein-infused water, PWR LIFT.
The Vita Coco Company’s expected earnings growth rate for the current year is 15%. The Zacks Consensus Estimate for current-year earnings has improved 5.1% over the past 60 days. COCO currently has a Zacks Rank #2. The Vita Coco Company has a beta of 0.37.
Monster Beverage Corporation
Monster Beverage Corporation is a marketer and distributor of energy drinks and alternative beverages. MNST was previously known as Hansen Natural Corporation. In 1992, the company acquired the Hansen Beverage business.
Monster Beverage Corporation’s expected earnings growth rate for the current year is 22.2%. The Zacks Consensus Estimate for current-year earnings has improved 3.7% over the past 60 days. MNST currently has a Zacks Rank #1. Monster Beverage Corporation has a beta of 0.48.
Service Corporation International
Service Corporation International has been strengthening its funeral and cemetery businesses for a while now. With a vast repertoire of funeral services and cemetery operations, SCI remains well-positioned to take advantage of the aging Baby Boomer generation.
Service Corporation International’s expected earnings growth rate for the current year is 9.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past 60 days. SCI currently has a Zacks Rank #2. Service Corporation International has a beta of 0.98.
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Vita Coco Company, Inc. (COCO): Free Stock Analysis Report Monster Beverage Corporation (MNST): Free Stock Analysis Report Service Corporation International (SCI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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