As the market gears up for potential volatility in the coming months due to the presidential election, low-beta names become more attractive.
Some investors only focus on a stock's beta without considering some of the fundamentals and sentiment that the market and Wall Street have toward them. Ideally, companies in thesector can combine the low volatility and stability that's now needed. Still, there is also an additional factor to consider: a subscription-based model to make it easier for analysts to project cash flows and valuations in the middle of a rocky market.
The stability of its business model enables the stock to carry a low beta of 0.5 today, which means that T-Mobile stock moves 50% less than the S&P 500 index. More than that, because of the ability to assess the future cash flows for the year, management can pay out a dividend of $3.5 a share for an annual yield of 1.7% today.
Over the quarter, short interest has also declined from a high of $4.5 billion to only $3 billion today, showing investors more signs of bearish capitulation, leaving more room for bullish investors to come in and take their place.
Utility stocks might be the best choice on this list to mitigate volatility, which is why American Water Works stock is a good buy today. With a beta below 0.70, the price action and volatility aspects are now taken care of for sentiment measurement.
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