Investing in the stock market involves risk. Diversification is a way of spreading risk, with the belief that if one stock falls, another might not fall as much, or even rise. Sector and industry diversification is another way to spread risk. Beta can be used as a risk barometer. It measures the volatility of a stock compared to the macro market. A beta of 1 implies that the stock moves with the market. Less than one means it is less volatile than the market. Higher than one means it is more volatile than the overall market. Technology stocks tend to be riskier, while low-beta stocks are less risky.
risk mitigation
To mitigate risk in a portfolio, it’s wise to consider adding low-beta stocks to balance out the higher-beta stocks or riskier components. Investors tend to overlook liquidity as a risk factor. The reality is that even if a stock is low beta, the thinner liquidity leads to more slippage when volume is also low. High liquidity should also be a factor in risk mitigation so that there is less slippage when making a trade. The following two stocks are both low beta and highly liquid with an average volume of over 2 million to 12 million shares per day, one in consumer staples and the other in healthcare.
General Mills is a consumer goods and food manufacturer. It’s known for its portfolio of popular cereal brands, including Cheerios, Wheaties, Raisin Nut Bran, Golden Grahams, Cocoa Puffs, and Lucky Charms. The company also produces meal kits, organic and natural products, snack foods like Bugles, soups, ice cream like Häagen-Dazs, and Blue Buffalo pet food. The share has consistently gained 28.72% in its one-year performance. This stock has a beta of 0.28 and pays a dividend yield of 2.75%.
Results for the second quarter of 2023
General Mills beat its second quarter 2023 EPS estimates by $0.04 at $1.10 versus $1.06. Revenue increased 3.9% year over year to $5.22 billion from $5.19 billion. The company raised its earnings guidance on February 21, 2023 during the CAGNY conference. It projects adjusted EPS growth of 7% to 8% in constant currencies, equivalent to $4.21 to $4.26 versus $4.14 analyst consensus estimates. Adjusted operating income is expected to grow 6% to 7% in constant currency. Free cash flow conversion should be 90% of adjusted after-tax earnings.
Technical Analysis
The weekly candlestick chart reached a high of $87.79 in December 2022. Shares have fallen since triggering the weekly MSH dip at $81.92. Weekly MSL trigger support stands at $77.21 as the weekly stochastic attempts to jump through the 20-band. The 20-period weekly exponential moving average (EMA) is unchanged at $79.15, followed by the 50-period weekly MA at $75.70. Pullback support levels are $77.21 weekly MSL trigger, $76.03, $74.24 and $72.91.
The MarketBeat MarketRank™ Forecast gives it 2.5 stars out of 5 with a price target up 4.63% from $82.16 per share.
This stock has a beta of 0.29 and pays a dividend yield of 2.79%. Premiere offers products and services to improve healthcare. Services include group purchasing, consulting, data analysis and advocacy. Its services help improve healthcare cost savings, efficiency and outcomes. It is a Group Purchasing Organization (GPO) that leverages economies of scale with over 3,000 negotiated contracts with leading manufacturers to achieve better prices for healthcare supplies. The company has saved over $100 million in supply chain costs for its customers on its $82 billion purchasing volume. Healthcare has several major tailwinds, led by the aging population with chronic diseases, which will bring increased spending and advances in medical technology.
Results for the second quarter of 2023
Premiere beats 2023 Q2 EPS estimates by $0.72 versus $0.66 analyst consensus estimates by $0.06. Revenue fell (5.2%) year-over-year to $359.6 million, beating analyst consensus estimates of $359.6. The company forecast full-year 2023 earnings per share of $2.53 to $2.63 versus analyst estimates of $2.63. It expects full-year 2023 revenue of between $1.38 billion and $1.45 billion versus analyst estimates of $1.41 billion. PINC shares trade at 12 times forward earnings and carry a short interest rate of 2%.
Technical Analysis
The weekly candlestick chart shows an inverse pup breakdown that includes the falling 20-period exponential moving average (EMA) resistance at $33.12, followed by the falling 50-period MA at $34.55. Dollar. The weekly stochastic has a small inverse pup falling below the 40 band. Weekly MSL triggers above $33.25. Pullback support levels are $30.43, $29.31, $28.59 and $27.06.
The MarketBeat MarketRank™ Forecast gives it 2.5 stars out of 5 with a price target up 15.6% from $41.50 per share.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
