The TSX stocks we’ve identified have low betas, meaning their stock prices are less sensitive to market fluctuations
SmallCapPower | October 24, 2018: Today we have discovered three TSX stocks that have fared well amidst a broad market sell-off in the major indices that began early October. These stocks all have a low beta, a measure of a stock’s sensitivity to broader macroeconomic factors, or systematic risk, that influence the stock market as a whole. A beta of 1 indicates that the stock tends to exhibit the same sensitivity to macroeconomic factors as do the major indices. A beta below 1 (but above 0) indicates that the stock is less sensitive to systematic risk than the market. A negative beta value is also possible, indicating that the stock tends to move in opposite directions compared to the market. Low beta stocks can be a useful addition to a portfolio during volatile times, such as this month, as it can reduce overall portfolio volatility.
Magellan Aerospace Corp. (TSX:MAL) – $19.09
Aerospace and Defense
Magellan Aerospace designs and manufactures aerospace components for corporate and military clients throughout the globe. These products include aeroengines, aerostructures, gas turbines for power plants, helicopter safety systems, as well as rocket systems for military use. On October 15, 2018, the Company announced it had obtained a license to manufacture A20X advanced aluminum cast parts, which are used for aerospace and defense purposes by major OEMs.
- Market Cap: $1.1 Billion
- 1 Month Returns: 5.8%
- 5-Year Beta: 0.26
Cogeco Communications Inc. (TSX:CCA) – $68.69
Cable and Satellite
Cogeco is a Canada-based telecom company operating in Ontario, Quebec, and the East Coast. The Company offers cable, Internet and telephone services via its Cogeco and Atlantic Broadband brands. Cogeco also operates Cogeco Media, a Quebec-based radio company with the leading share in hours listened in Montreal and Quebec City. The Company’s low beta can be attributed to Internet and cable services being less discretionary than other services, such as Netflix subscriptions. As such, during economic downturns and market volatility, Cogeco’s services are unlikely to be canceled by customers.
- Market Cap: $2.3 Billion
- 1 Month Returns: 6.3%
- 5-Year Beta: 0.63
Clairvest Group Inc. (TSX:CVG) – $46.09
Investment Management
Clairvest Group is a provider of private equity financing to mid-market companies. The Company specializes in partnering with management teams and other stakeholders of both emerging and established companies. It seeks to form mutually-beneficial investments with entrepreneurial corporations. Clairvest invests in various industries, such as contract manufacturing, defense services, financial services, gaming, textile rental service and waste management, among others. It provides loans to and earns priority distributions or management fees and carried interest from the CEP Funds. Net income for Q1 2019, or the three months ended June 30, 2018, was $54.7 million.
- Market Cap: $702.2 Million
- 1 Month Returns: -6.3%
- 5-Year Beta: 0.22
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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