Navigating October’s Market Volatility: A Focus on Stable Stocks 📈
October often brings significant fluctuations to the financial markets. Despite this trend, there are certain stocks that demonstrate remarkable stability, providing a refuge amidst market turmoil. Historically, since 1950, the S&P 500 has shown an average daily change of 1.3% during October, with the month being particularly tumultuous even when excluding noteworthy downturns like the Black Monday crash of 1987. In anticipation of this volatility, an analysis has identified some resilient stocks that could serve as a safety net for investors during this unpredictable period.
Criteria for Stock Selection 🧐
When compiling a list of stocks that could provide stability this year, several key factors were considered:
- Low Volatility: A three-year Beta value of less than 1.0 indicates reduced price fluctuations.
- Past Performance: A median increase of at least 3% in stock value over the previous ten Octobers.
- Minimal Losses: Must not have lost more than 1.5% in any October over the past decade.
Below is a closer look at five stocks that fit these criteria, along with insights into Wall Street’s expectations for their future performance.
Power Companies Lead the Way ⚡
The majority of the identified stocks belong to the utility sector. Recently, investor interest in rate-sensitive utility stocks has surged, reflecting a shift toward anticipating a more favorable interest rate environment. So far this year, the utility sector has seen an impressive growth of nearly 27%, outperforming the S&P 500, which has gained about 20% during the same period.
Among these stable stocks are notable examples:
- NextEra Energy: This company has achieved a median gain of 3.5% over the past decade during October. With a three-year beta of just 0.75, it exhibits lower volatility. This year has seen NextEra’s shares soar by approximately 39%, with two-thirds of analysts designating it as a buy or strong buy.
- FirstEnergy: This stock, too, has demonstrated a median increase of more than 3.5% over the previous ten Octobers along with a beta of 0.75. The company has advanced about 20% this year, and analysts agree on a buy consensus for its stock.
- American Electric Power: Currently, this stock holds a consensus rating of hold among analysts. Although shares have risen nearly 25% this year, the stock trades 1% above its average price target, making investors cautious.
- PPL Corporation: PPL has similarly grown around 22% this year and offers a dividend yield of 3.2%. It aligns with the criteria established for stability.
Non-Utility Stock Spotlight 💼
Among the stable stocks identified, Truist Financial stands out as the only representative outside the utility sector. Over the past decade of Octobers, it has delivered a median gain of 3.66% with a beta value of 0.81, indicating moderate risk. Year to date, Truist shares have appreciated by 15.6%. While more than half of the analysts view the stock as a hold, the existing consensus price target suggests there could be an upside potential exceeding 9% relative to its recent close.
In conclusion, as you navigate through October’s unpredictability, consider these stable stocks as potential buffers against volatility. By focusing on utilities and selected financial stocks, you may find that you have a smoother ride during this historically turbulent month.
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