This is an important factor that separates Family Dollar Stores, Inc. (NYSE:FDO) from cheap-giant Wal-Mart. While Family Dollar often charges more for its wares, it can get away with it because customers don’t have to make a special trip to a regional store. So the company has happily grown in the shadow of the retail giant.
With a beta below 0.5 and a modest dividend yield (1.6% or so), Family Dollar Stores, Inc. (NYSE:FDO) should interest those concerned about volatility. The stock has been on a nice run, however the company still has room to keep expanding as it enters new market and, because of its hyper local business model, broadens its reach in existing ones. So Family Dollar Stores, Inc. (NYSE:FDO) would be a good option for a growth-minded investor seeking a stock that has historically avoided the market’s volatility.
Gotta Get Rid of the Trash
Waste Connections, Inc. (NYSE:WCN) has the lowest beta of the three stocks here, at less than 0.3. The company operates in the highly competitive trash business, but has taken a unique approach. It essentially sidesteps the markets with the most competition and focuses on less developed suburban and rural markets.
The company’s top line has grown steadily for a decade, with the bottom line following a roughly similar path. In fact, Waste Connections, Inc. (NYSE:WCN) recently initiated a dividend and has been increasing it annually (it has a miserly 1% or so dividend yield). The big take away from this is that the company weathered both the 2007 to 2009 recession and housing bust in stride.
A recent acquisition that moves the company into the energy drilling waste disposal sector should be good for future growth. But the real reason to like Waste Connections, Inc. (NYSE:WCN) is that it provides a necessary service in low competition markets. Like Family Dollar, however, it is most appropriate for growth investors looking for lower volatility fare, since solid performance has led to a pretty steady ascent over the years.
Low Beta and Stuff People Buy
Each of the companies above has a low beta. That can help keep a portfolio’s risk profile down. However, Altria Group Inc (NYSE:MO) selling an addictive substance makes customers sticky and promotes top line stability. That makes it a nice option for income seekers. Family Dollar, meanwhile, sells everyday items that people buy, with a focus on the less affluent. If a market sell off is accompanied by a recession, its business should hold up well. Waste Connections, Inc. (NYSE:WCN) takes out the trash, a nasty job that never goes out of style.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article BlackRock Expecting Heightened Volatility, Go Low Beta originally appeared on Fool.com.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
