Inflation showed signs of cooling, leading the Federal Reserve to start cutting interest rates in September. However, inflation has unexpectedly seen a jump over the past two months. According to the latest data, inflation in November rose the most in seven months.
Given this situation, it would be wise to invest in stocks from a defensive space like utilities and consumer staples such as Atmos Energy Corporation ATO, Avangrid, Inc. AGR, Middlesex Water Company MSEX, Ingredion Incorporated INGR and Tyson Foods TSN.Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, these belong to the category of low-beta stocks (beta greater than 0 but less than 1). Hence, the recommended approach is to invest in low-beta stocks with a high-dividend yield and a favorable Zacks Rank.
The Commerce Department said on Wednesday that the consumer price index (CPI) rose 0.3% in November, recording its largest gain since April, after climbing 0.2% for four consecutive months. Year over year, CPI increased 2.7%. Core CPI, which excludes the volatile food and energy prices, increased 0.3% month over month in November and 3.3% from the year-ago levels.
Both CPI and core CPI came in line with expectations, raising hopes of another rate cut by the Federal Reserve in its December FOMC meeting next week. Investors believe that inflation is still not that high to prevent the Fed from cutting interest rates.
This saw all three major indexes closing in positive territory on Wednesday. Although still under control, inflation has been rising steadily over the past four months, which could reignite fears any time. The post-election rally also appears to have come to a halt after stocks pulled back in the past four sessions before the release of the CPI data.
Despite being optimistic about lower taxes and fewer regulations under the Trump administration, investors are still unclear about how things will shape up. Also, the minutes of the Federal Reserve’s November policy meeting revealed that although the central bank will be cutting interest rates it will be at a “gradual” pace. These could make markets volatile in the coming days.
Atmos Energy Corporation, along with its subsidiaries, is engaged in regulated natural gas distribution and storage business. ATO serves nearly 3.3 million customers in more than 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energyoperates more than 73,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines.
Atmos Energy has an expected earnings growth rate of 5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the last 60 days. ATO presently carries a Zacks Rank #2. Atmos Energy has a beta of 0.70 and a current dividend yield of 2.247%.
Avangrid, Inc. is the third-largest solar and wind generator in the United States, with $44 billion of assets. AGR operates via two primary businesses, namely Avangrid Networks and Avangrid Renewables.
Avangrid has an expected earnings growth rate of 12% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.5% over the last 60 days. AGR presently carries a Zacks Rank #2. Avangrid has a beta of 0.56 and a current dividend yield of 4.95%.
Middlesex Water Company treats, stores and distributes water for residential, commercial, industrial and fire prevention purposes.
Middlesex Water Company has an expected earnings growth rate of 33% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.9% over the last 60 days. MSEX presently carries a Zacks Rank #2. Middlesex Water Companyhas a beta of 0.82 and a current dividend yield of 2.22%.
Ingredion Incorporated is an ingredients solutions provider specializing in nature-based sweeteners, starches, and nutrition ingredients. INGR serves diverse sectors in food, beverage, brewing, pharmaceuticals and other industries.
Ingredion’s expected earnings growth rate for the current year is 12.4%. The Zacks Consensus Estimate for current-year earnings has improved 6.4% over the past 60 days. INGR currently sports a Zacks Rank #1. Ingredionhas a beta of 0.74 and a current dividend yield of 2.22%.
Tyson Foods is the biggest U.S. chicken company and produces, distributes and markets chicken, beef, pork, as well as prepared foods. TSN’s products are marketed and sold primarily by sales staff to grocery retailers, grocery wholesalers, meat distributors, military commissaries, industrial food processing companies, chain restaurants, international export companies and domestic distributors.
Tyson Foods’expected earnings growth rate for the current year is 13.2%. The Zacks Consensus Estimate for the current-year earnings has improved 4.2% over the past 60 days. TSN currently has a Zacks Rank #2. Tyson Foods has a beta of 0.79 and a current dividend yield of 3.21%.
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