JPMorgan's head of global and European equity strategy, Mislav Matejka, highlights that low-volatility stocks in the U.S. and Europe have underperformed recently, declining 6% since the onset of the Middle East conflict, while bond yields have risen by 55 basis points.
These stocks, which include sectors like consumer staples, healthcare, and utilities, are characterized by lower price fluctuations and generally provide attractive dividends. Matejka notes that if bond yields stabilize, these low-volatility stocks could rebound, similar to earlier this year when they rallied as yields fell.
He emphasizes that this investment strategy is appealing due to its potential performance across various macroeconomic scenarios. Notable stocks in JPMorgan's low-volatility index include Coca-Cola, which has a 2.6% dividend yield and has raised its earnings guidance, and Rollins, with a nearly 22% upside potential according to analysts.
Procter & Gamble, despite recent challenges, also holds an overweight rating and has a 3.01% dividend yield, with analysts projecting a 15% upside to its average price target. Overall, JPMorgan's analysis suggests that now may be an opportune time for investors to consider these low-volatility stocks as they navigate market uncertainties