5 Stock-Picking Strategies To Counter Market Turbulence
Zacks Investment Research | Aug 26, 2019 08:38AM ET
Trade war has been playing foul on the stock market in the past month, triggering fears of a global recession and a sharp fall in bond yields. The trade drama took a turn for the worse, following China’s retaliation to the earlier proposed 10% tariff on an additional $300 billion in Chinese goods by President Donald Trump to be imposed on Sep 1.
China plans to impose new tariffs of 5-10% on $75 billion worth of imported goods from the United States. The bulk of the Chinese tariffs will take effect on Sep 1, while the rest of the duties will be effective Dec 15.
In response, Trump raised tariffs on $550 billion worth of Chinese goods. Existing tariffs on $250 billion Chinese goods are expected to increase from 25% to 30% effective Oct 1 and planned tariffs on a further $300 billion in Chinese goods will increase from 10% to 15% in two stages — on Sep 1 and Dec 15. Further, Trump ordered U.S. companies to look at alternative ways to make their products in the United States and close operations in China.
Worsening trade tensions are hurting U.S. consumers, pushing up prices of goods and thereby curtailing spending. It will further impact the worldwide economy and corporate profits, particularly at big U.S. exporters. All these will continue to weigh on the stock market and could disrupt global supply chains.
Against this backdrop, we have highlighted some stock-picking ideas from the top-ranked cohort that could prove extremely beneficial for investors by reducing the risk of a downside:
Low-Beta Stocks
Low-beta stocks exhibit greater levels of stability and usually lose less when the market is crumbling. Though these have lesser risks and lower returns, the stocks are considered safe and resilient.
Dr. Reddy's Laboratories Ltd (NYSE:RDY) having beta of 0.21 seems a good bet in this category. Based in India, Dr. Reddy's operates as an integrated pharmaceutical company worldwide. The stock has an expected earnings growth of 25.61% for the fiscal year (March 2020). It has a Zacks Rank #1 (Strong Buy) and VGM Score of A. You can see Zacks Investment Research
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