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7 stocks that even a bear could love

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In an environment in which many investors appear increasingly anxious about the market's next move, a few stocks stand out as potential picks for those unenthusiastic about American equities as a group right now.

These would be the so-called low beta stocks.

Beta is frequently thought of as the measure of a stock's volatility, but that is only half of the equation. In fact, beta is the output of a simple mathematical equation that takes the product of a given stock's standard deviation and its correlation with the overall market, and divides that by the market's standard deviation.

These calculations make a stock's "beta" the easy answer to the question: How much should I expect this stock to rise (fall) for every percentage point the overall market rises (falls)?

When it comes to the seven stocks below, the answer is: Not much.

All of them have betas below 0.24, and gold giant Newmont Mining has a beta of less than 0.07, based on FactSet's analysis of the past five years of data. That means that if the S&P 500 plunges 10 percent, that broad-market drop should only contribute to a 0.7 percent slide for Newmont.

low beta csv

Ticker Company Change (YTD) Beta (5-year)
NEMNewmont Mining114.56%0.07
AWKAmerican Water Works23.90%0.10
HSYHershey11.63%0.15
EIXEdison International21.53%0.20
WMTWal-Mart Stores16.33%0.21
LLYEli Lilly-7.70%0.21
CHDChurch & Dwight17.14%0.24

Indeed, the above names are the lowest-beta stocks in the S&P 500, once the index's smallest and most yield-sensitive names are excluded.

Newmont's low beta is easy to explain: The stock is essentially a play on gold prices, which often move inversely to the overall market.

For the others, it is easy to see that they provide products that consumers buy in good times and bad.

In contrast to the offerings of high-beta stocks like Royal Caribbean Cruises and Hewlett Packard Enterprise, Americans need water, energy and chocolate in good times and bad. Likewise for the baking soda sold by Church & Dwight, and the cancer and erectile dysfunction medications offered by Eli Lilly.

The bottom line? If you want to invest in a company that isn't liable to drop alongside the market, find one that sells products consumers will simply refuse to go without.