These stocks do well when market volatility spikes

Published Thu, Jul 8 202112:37 PM EDT

Wall Street's fear indicator spiked Thursday as the stock market shuddered on growing fears of a hiccup in the global economic comeback story. History shows certain stocks outperform during periods of turmoil. The CBOE Volatility Index, known as the VIX, surged above the 20 threshold at one point Thursday morning. The index is derived from prices of options on the S & P 500 and a rising value typically means increasing fears by investors for a bigger sell-off ahead. CNBC PRO identified the 10 months in the past five years with the biggest spikes in the VIX. Then, we analyzed the performance of S & P 500 stocks during those months. We found the stocks with the highest median performance during those months of volatility spikes. To weed out any especially volatile names, we removed names that declined more than 20% during any one of those VIX surge periods. From this pool, CNBC PRO screened for stocks that at least 60% of analysts like today with buy ratings. We also looked for stocks with more than 10% potential upside based on average 12-month price targets from analysts. Take a look at the top 20 names on CNBC PRO's list of Wall Street-favored stocks that do well when volatility spikes. The screen used FactSet data. Netflix snagged the top spot on our list. The streaming giant had a median gain of 0.1% during VIX spikes, the only stock with an average positive return based on CNBC PRO's screen. Netflix thrived during the turmoil last year as consumers increased their streaming during the pandemic. Some tech shares with growth independent from the economy can sometimes do well in tough times. CNBC PRO's list also includes many traditional low-volatility plays such as utilities stocks. Edison International , American Electric Power Company and Evergy all take top spots for average return during volatile periods. Intercontinental Exchange also emerged as a historically strong performer during VIX spikes. Overall market volatility typically bodes well for exchanges. Other names on CNBC PRO's list include Lam Research , McDonald's , T-Mobile and Walt Disney Company .

The Netflix logo is shown in this illustration photograph in Encinitas, California.

Mike Blake | Reuters