3 Low Beta Kings That Outperform During Market Volatility

Are you tired of the market volatility that's affecting your portfolio? What if I tell you that there is a measure that helps you look at how sensitive stock is to market movement? Let me introduce "Beta." Beta measures a stock's volatility relative to the overall market. A stock with a beta of 1 has the same volatility as the overall market, while a stock with a beta greater than 1 is more volatile, and a stock with a beta less than 1 is less volatile than the market.

In this environment where market swings are erratic due to rising interest rates, inflation, recession, or any other “excuse of the day,” beta may be a way for investors to gauge stocks that can outperform the market during volatility. 

In this article, let's look at 3 low-beta stocks that investors should watch out for during volatility.

Lancaster Colony Corporation (LANC)

Beta:0.22

Lancaster Colony Corporation is a specialty food manufacturer and marketer in the United States, serving the retail and food service markets. The company was founded in 1961 and has its headquarters in Westerville, Ohio. It also has over 3,200 employees.

The company operates in two segments:

The retail products sector offers salad dressings and dips made by Marzetti; toast and croutons made by New York Brand Bakery; and homemade rolls by Sister Schubert’s.

The food service sector provides a wide variety of high-quality food items that can be found nationwide in well-known restaurant chains as well as on the daily dinner tables of millions of consumers.

The company also offers other popular products such as Flatout Flatbread, Reames frozen egg noodles, Girard's specialty dressing, etc., to name a few. Through exclusive license agreements, it also develops and provides a variety of dressings and sauces to the retail market, including Olive Garden dressing, Chick-fil-A sauces, and Buffalo Wild Wings sauces.

LANC has a Dividend Yield of 1.77% based on its last trading price of $188.32. The companies’ latest declared dividend is $0.85 with an ex-date of March 8, 2023, and a Record date of March 9, 2023. The pay date is set for March 31, 2023. TR has continuously increased its dividends for 60 straight years and is another coveted Dividend Kings list member.

Recent Financials

LANC released its Q4 2022 financials, stating a 12.18% revenue growth and net income growth of 6.33%. EPS was reported at $1.45 and missing estimates by 3.97%.

Analyst Recommendations

Analysts are giving LANC a “Hold” rating based on 3 Holds analysts. The mean price target is $208.00, an upside of 10.45%.

Hormel Foods Corp (HRL)

60-Month Beta: 0.19

Hormel Foods Corporation is a food processing company based in Austin, Minnesota. The company was founded in 1891 by George A. Hormel, and today the company has over 20,000 employees.

HRL offers its products in over 80 countries. The company has many subsidiaries, joint businesses, and corporate venturing groups under its banner. Some of the most famous ones are:

• Applegate Farms, LLC - The top brand in the organic cooked-meat sector.
• Columbus Manufacturing - The most popular deli brand in the US.
• Hormel Foods International - A fully-owned branch of Hormel Foods Corporation that exports food items to over 60 countries.
• MegaMex Foods, LLC - A joint project between Herdez del Fuerte, S.A. de CV and Hormel Foods. It is the industry's top supplier of Mexican food products for retail, restaurants, and corner shops.
• 199 Ventures - The corporate venturing group of Hormel Foods Co.

HRL has a Dividend Yield of 2.51% based on its last trading price of $48.83. TR's last dividend was $0.275, paid on February 15, 2023. HRL is expected to announce its next dividend in the last week of March based on its historical disclosures. TR has continuously increased its dividends for 57 straight years and is part of the coveted Dividend Kings list.

Recent Financials

HRL‘s last quarter grew 8.21%, and its latest quarterly financials are expected to be released tomorrow, March 3, 2023, with an earnings estimate of $0.45 per share.

Analyst Recommendations

Analysts issued HRL a “Hold” rating based on 1 Strong Buy, 6 Holds, and 1 Moderate Sell from analysts. The mean price target is $48.80, and a high target of $53.00, an upside of 20.92%.

Recent Developments

Hormel Foods Wins Product of the Year – HRL received the prestigious Product of the Year in the appetizer category for its Columbus® Charcuterie Tasting Board.

Hormel Foods Announces Investment in Garudafood -HRL announced its partnership and minority investment in Garudafood to aggressively support its strategy to increase its global presence. Garudafood is one of Indonesia's largest food and beverage companies, and the partnership will expand HRL's business in Indonesia and Southeast Asia.

Tootsie Roll Industries (TR)

60-Month Beta:0.16

Tootsie Roll Industries, Inc. manufactures and sells confectionery products along with its subsidiaries. The company sells products under the registered trademarks: TOOTSIE ROLL, TOOTSIE POPS, CHILD’S PLAY, CARAMEL APPLE POPS, CHARMS, BLOW-POP, CHARMS MINI POPS, CELLA’S, DOTS, JUNIOR MINTS, CHARLESTON CHEW, SUGAR DADDY, SUGAR BABIES, ANDES, FLUFFY STUFF, DUBBLE BUBBLE, RAZZLES, CRY BABY, NIK-L-NIP, and TUTSI POP (Mexico). Its products are sold in the United States, Canada, and Mexico through approximately 25 food and grocery brokers and to customers by the company itself. 

Tootsie Roll Industries, Inc. has a wide range of customers that include wholesale distributors of candy, dollar stores, chain grocers, discount chains, cooperative grocery associations, mass merchandisers, food and groceries, supermarkets, variety stores, warehouse, and membership club stores, the United States military, e-commerce merchants, and fund-raising charitable organizations.

Today, the company has a Dividend Yield of 0.82% based on its last trading price of $43.62. The company’s latest declared dividend is $0.09, with an ex-date of March 3, 2023, and a record date of March 6, 2023. The payout date is set for March 30, 2023. While the yield isn’t high, its low beta can allow the stock to outperform the market during times of volatility. Not only that, TR has continuously increased its dividends for 53 straight years and is part of the coveted Dividend Kings list.

Final Thoughts

Investing in low-beta companies with consistent dividend payouts can provide stability and income to your portfolio, especially during these turbulent times. Always remember that this is just one key to a puzzle. You should continually assess the company's financial health (i.e., its history of dividend growth), and review its business model before making any investment decisions.

 

More Stock Market News from Barchart

• Stocks End Mostly Lower as Global Bond Yields Push Higher
• Meta Got Rich Running Ads, But Now, Its #1 Revenue Stream Is Threatened
• Are First Solar’s Latest Results Good or Bad News for Tesla?  
• The End Of Medical Middlemen in the American Healthcare System?

On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.