These low volatility stocks are proving to be resilient in a wild 2022, Barclays says

Published Mon, Apr 11 202211:02 AM EDTUpdated Mon, Apr 11 202211:04 AM EDT

As stocks churn this year, Barclays highlighted steady names to ride out market volatility. "Low volatility strategies have proven resilient YTD, particularly during sharp SPX selloffs and downside reversals like those seen over the last week," Barclays analysts said in a note Sunday. The war in Ukraine has loomed over financial markets as Russia's invasion sparked concerns about global economic growth and the supply of key commodities like energy and agricultural products. The Federal Reserve's path to tamp down inflation through tightening monetary policy has also influenced market action this year. The Fed in March raised interest rates for the first time since 2018 and is set to hike rates at every remaining policy meeting this year. The central bank also plans to reduce its balance sheet, likely starting in May. The S & P 500 is down more than 6% in 2022 as of Monday morning, but the broad-market index has toggled between up weeks and down weeks. "Equities have rallied over the past few weeks; however, we remain cautious and believe upside is limited as the full effects of the Russia-Ukraine conflict are not known yet and risks of a Fed policy mistake are high given the unprecedented nature of the current crises," the note said. To find stocks to meet the moment, Barclays screened for overweight-rated names with at least 10% upside to their price targets. Analysts then screened for stocks in the lowest quintile of the S & P 500 based on 360-day realized volatility. Take a look at five low volatility names on Barclays' list. Costco is beating the market this year, up roughly 3% in 2022 as of Monday morning. Barclays projects the stock can rise another 11% from here. The retailer should benefit from inflation as consumers flock to warehouse clubs for lower prices, Wall Street analysts say. Sky-high gas prices due to the war in Ukraine, in particular, could draw more customers to Costco. "We expect the recent spike in gas prices to provide a boost to club traffic in Q1, which should benefit in-store comps. Clubs are known for having the lowest prices at the pump, which historically has served well for customer acquisition and driving in-store sales," Jefferies' Stephanie Wissink said in a note Friday. McDonald's is another low-volatility name Barclays highlighted. The stock is down more than 6% this year. However, Barclays analysts see 21% upside ahead. The fast-food giant should prove resilient even as higher input costs weigh on restaurants, analysts say. "We continue to see MCD as best positioned within the Fast Food peer set to benefit from consumer 'belt-tightening', continued mobility improvements, (operationally simple) menu innovation, and strong digital momentum," Goldman Sachs' Jared Garber said. Other stocks Barclays listed include AT & T , General Dynamics and Cisco Systems . —CNBC's Michael Bloom contributed to this report.

Attendants direct cars as they line up to fill their gas tanks at a COSTCO on Tyvola Road in Charlotte, North Carolina on May 11, 2021.

Logan Cyrus | AFP | Getty Images

As stocks churn this year, Barclays highlighted steady names to ride out market volatility.

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