The way investors react to market volatility is ultimately what will define their long-term success. We've recently seen some of the greatest years in the history of the stock market, which has resulted in many people having a hard time adjusting to today's treacherous market conditions. While it's difficult to say how long the volatility will last, developing a solid playbook for reacting to large declines and seizing bargains that do well in a "risk-off" tape is an important skill to work on.
If you're looking for a good starting point, focusing on low-beta names that tend to endure during market downturns may be one of the most effective strategies to manage volatility. These companies are ideal for conservative investors, and over time, they have shown consistent returns for shareholders, implying that adding shares even when they are falling can result in a profitable long-term investment.
Here are three stock selections for conservative investors to give you some ideas about which names to investigate in such a volatile market.
PepsiCo (NASDAQ: PEP)
PepsiCo stock is one of the few bright spots in a gloomy market at this time, and it's no surprise that investors are flocking to blue-chip consumer staples firms like it. PepsiCo has grown into a real global powerhouse because of its diversified product line, which has helped it compete on an international scale. Organic sales growth is expected as the economy continues to recover, while a focus on increasing its health-conscious goods might be another key catalyst in the near term.
The demand for these health-conscious snack foods is on the rise, and PepsiCo's Sabra Hummus, Baked Lays, and Bubly sparkling water suggest that management understands the potential for growth. Since demand for PepsiCo's products is nearly limitless, the firm enjoys a competitive advantage in almost any market. Finally, this company has excellent defensive qualities since it will see strong demand for its items in every economy. This was a great pick for moderate investors to consider due to a 0.66 beta value, dividend growth history, and share repurchase
Berkshire Hathaway Inc (NYSE: BRK.B)
Insurance companies are perhaps one of the most conservative industries, and its wonderful to have Berkshire Hathaway stock to have exposure to that market. It's also a nice stock to own because you have legendary investor Warren Buffett in command, which should go some way toward assuaging investors' fears about their money being handled well. Berkshire Hathaway is a firm that provides exposure to railroads, financial services, energy, retailing, and other sectors, which is an appealing selling point.
What's even more appealing about this firm is that it generates a great deal of money every quarter as a result of its business strategy, which is then invested in new purchases throughout time. Companies with a lot of financial stability should be top priorities for conservative investors, and Berkshire's balance sheet is arguably the best in the industry, owing to more than $149 billion in cash and short-term assets as of September 30, 2021. The stock is breaking out to all-time highs in a difficult market environment, suggesting that investors want to acquire shares during uncertainty.
Walmart Inc (NYSE: WMT)
Finally, here's a low-volatility stock that could have a good year after an underwhelming 2021. Walmart is the world's largest retailer, with over 11,000 discount department stores, wholesale clubs, supermarkets, and supercenters. Given all of the increases in inflation that have been reported recently, we expect customers to be price-conscious in 2022. The company's e-commerce service Walmart+ should also help the firm attract even more customers from its rivals in the future.
Walmart stock has a long history of increasing its dividend payments, which indicates that it is a well-managed firm with adequate financial stability to continue rewarding investors for years. Walmart's Q3 comparable sales increased 9.2% year over year and is anticipated to have a good quarter due on the holiday shopping season. With a beta value of 0.52 and merchandise that consumers will always be interested in acquiring, Walmart stock is an excellent choice for conservative investors to consider.