With markets undergoing high volatility, it will likely take a few weeks for the market to get back to a calmer daily trading range. Investors unused to volatility may want to look for ways to avoid watching big daily swings.
One such way is to look for stocks with a low beta. Beta is a measure of how a single stock trades relative to the market. A stock that trades exactly with the market has a beta of 1.0.
Companies with a beta under 1.0 are less volatile. They also tend to include many dividend-growth stocks, which can offer investors better long-term returns with the dividends reinvested.
One such low-volatility stock is drug manufacturer Eli Lilly (LLY). The stock has a beta of 0.4, and just reported better-than-expected earnings.
That could help boost shares in the months ahead, while delivering a smoother ride for investors.
Action to take: Investors may like shares here. While Eli Lilly pays a 0.7% dividend, it has a long history of growing that payout over time. That and the short-term upside potential after the recent market drop could give investors a double-digit return by year-end.
For traders, the November $950 calls, last trading for about $26.50, could see mid-to-high double-digit returns from a further rally going forward.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.