Rush to Low-Volatility Stocks is Creating Some Bargains . . . in High-Volatility Shares: Look at These

Money has been pouring into low-volatility exchange traded funds this year. This YCharts story looked at two of them, as well as at research that showed that over 20 years, a low-volatility index returned 9.9% annually vs 7.8% for the S&P 500.

But all that interest in low volatility (read: value) investments is driving up prices is some sectors, like utilities, and creating some good deals in others. SmartMoney reports that more volatile stocks are trading at a discount – a 16% discount for “high-beta” stocks vs “low-beta” ones. Utilities are more expensive than energy companies. Cereal companies are most expensive than restaurant companies. And so on.

Consider Joy Global (JOY), a machinery and manufacturing company. Its revenue growth has risen sharply, as has its earnings:

JOY Revenue Growth Chart

JOY Revenue Growth data by YCharts

Yet its PE has fallen:

JOY PE Ratio Chart

JOY PE Ratio data by YCharts

Consider also Ford (F), whose earnings are admittedly better than revenue growth:

F Earnings Per Share Chart

F Earnings Per Share data by YCharts

But its PE has plummeted:

F PE Ratio Chart

F PE Ratio data by YCharts

And look at Lennar’s (LEN) revenue growth and earnings:

LEN Revenue Growth Chart

LEN Revenue Growth data by YCharts

Compare that to its PE:

LEN PE Ratio Chart

LEN PE Ratio data by YCharts

By contrast, you can pick up Consolidated Edison (ED) for a PE of 17.48. Or Clorox (CLX) for 17.52. It’s worth looking at what else low-volatility stock pickers left behind.

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.


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