Argus Expert Eyes "Min Vol" Stocks for Defensive Investors

05/23/2019 5:00 am EST


John Eade

Chairman & CEO, Argus Research Group

With the stock market stalled on concerns over a trade war between the U.S. and China, some investors are beginning to investigate end-of-rally strategies, suggests John Eade, an analyst with the independent research firm, Argus Research.

Minimum volatility, or “Min Vol,” often falls into this defensive category. Argus believes, however, that Min Vol is an all-weather strategy that is timely in any investing climate, and that serves well as a complement to a core holdings strategy.

Academic literature and — more to the point — returns history indicates that Min Vol can deliver market-matching returns on an absolute basis and superior returns on a risk-adjusted basis across the market cycle.

We have a Min-Vol model portfolio available on our website. Stocks included in the portfolio are typically industry leaders and have received a high score from our A6 Quant Model on Financial Strength and a low score on Risk. These stocks are included:

Sysco Corp. (SYY): Based in Houston, Sysco is the largest foodservice marketing and distribution company in North America. The shares yield 2.2%. The beta is 0.84.

Stryker Corp. (SYK): Stryker manufactures and markets medical devices, primarily in the orthopedic market. The beta on this large-cap HC company is 0.97.

Public Storage (PSA): This REIT operates self-storage facilities and benefits from economies of scale (it is by far the largest storage company), brand recognition, and locations with high barriers to entry. The beta on the PSA stock 0.45.

Waste Management Inc. (WM): Waste Management is North America's largest provider of comprehensive waste management services, serving municipal, commercial, industrial and residential customers. The beta on the shares is 0.67.

Walmart Inc. (WMT): Walmart is a survivor in the very tumultuous retail sector. The company's finances are top tier within this sector and the store environment is improving. The shares yield 2.1%.

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