August, traditionally, has been one of the worst months for Wall Street. The month goes through a volatile phase as stock market participation gets reduced, resulting in lesser trading volumes. And this August is certainly living up to its reputation, which is leading to increased gyrations among stocks.
A trifecta of events that recently unfolded has also created market turbulence. All in all, the S&P 500 and the Dow have lost 2.6% and 1.2%, individually, so far this month. The tech-laden Nasdaq slipped 4.4% since the beginning of August and has now entered negative territory for the quarter.
So, what led to market upheavals? The selloff was ignited by a downgrade of several small to mid-sized U.S. banks by Moody’s. The rating agency warned that these U.S. lenders may find it hard to make money in a higher interest rate environment. Threats of an imminent recession may also impact such lenders.
Another rating agency, Fitch, downgraded the U.S. government’s long-term credit rating from AAA to AA+. Fitch Ratings expressed concerns that the debt burden in the United States may escalate soon, and they were compelled to demote U.S. credit rating mostly because of the debt ceiling crisis in Washington.
Meanwhile, a deepening slowdown in China’s economy is also unsettling investors. China’s exports and imports took a beating in July due to subdued demand for commodities across the globe. What’s more, the second-largest economy in the world is now on the verge of a malicious situation called deflation.
Consumer prices have barely risen for quite some time in China, while wholesale and real estate prices are plummeting as consumers aren’t willing to spend. China is already in high debt, and such deflationary issues may now easily cripple its economy, which will have a spiraling effect globally.
Thus, from an investment perspective, since August is experiencing bouts of volatility, it’s prudent for investors to place bets on safe stocks such as Runway Growth Finance Corp. RWAY, Crescent Capital BDC CCAP, Getty Realty GTY and Cogent Communications CCOI for a steady stream of income.
These stocks are dividend payers, which means they have a sound business model that helps them stay afloat amid market vagaries. To top it, these stocks have a low beta (ranges from 0 to 1), making them unperturbed to market volatility. They have a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Runway Growth Finance is an externally managed business development company. The company has a beta of 0.76 and a Zacks Rank #2.
RWAY has a dividend yield of 12.3%. The Zacks Consensus Estimate for its current-year earnings has moved up 0.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 25.3%.
Crescent Capital is a business development company. The company has a beta of 0.85 and a Zacks Rank #2.
CCAP has a dividend yield of 9.9%. The Zacks Consensus Estimate for its current-year earnings has moved up 5.3% over the past 60 days. The company’s expected earnings growth rate for the current year is almost 13%.
Getty Realty is a real estate investment trust. The company has a beta of 0.86 and a Zacks Rank #1.
GTY has a dividend yield of 5.5%. The Zacks Consensus Estimate for its current-year earnings has moved up 7.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 5.6%.
Cogent Communications offers low-cost, high-speed Internet access, private network services, and colocation center services with ultra-low latency data transmission. The company has a beta of 0.45 and a Zacks Rank #2.
CCOI has a dividend yield of 6.4%. The Zacks Consensus Estimate for its current-year earnings has moved up 13.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 156.3%.
Getty Realty Corporation (GTY): Free Stock Analysis Report
Cogent Communications Holdings, Inc. (CCOI): Free Stock Analysis Report
Crescent Capital BDC, Inc. (CCAP): Free Stock Analysis Report
Runway Growth Finance Corp. (RWAY): Free Stock Analysis Report
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Zacks Investment Research
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