Over the last week, the ASX has been hugely volatile and this has left many Aussie investors feeling worried about their portfolios. In fact, the ASX has been as high as 5913 and as low as 5748, which is a range of 165 points (or just under 3%) of the level at which the index kicked off the week.
While volatility is part and parcel of investing, it is possible to smooth out the ebbs and flows of the wider index by investing in stocks with low betas.
Such companies offer a less volatile experience than many of their peers, with a beta of 0.5, for example, meaning that a company's share price should (in theory) move by just 0.5% for every 1% change in the value of the ASX.
And, to get you started with lower volatility investing, here are three top quality stocks that all have low betas (and bright futures):
1. Telstra Corporation Ltd (ASX: TLS) has a beta of just 0.5 and yet also has considerable growth potential from its increasing exposure to fast-growing markets across Asia. In fact, Telstra is aiming to derive a third of its revenue from the region within five years. In addition, Telstra has a fat, fully franked yield of 4.7% and trades at only a slight premium to the wider telecoms sector. For example, Telstra has a price to earnings (P/E) ratio of 18 versus 17.8 for the sector which, given its excellent attributes, seems to be a price worth paying.
2. Also having a beta of 0.5 is Ramsay Health Care Limited (ASX: RHC). It offers substantial growth potential across Europe, Asia and also in the domestic market and, looking ahead, could be a major beneficiary of a weakening Aussie dollar should interest rates fall further. Ramsay has a superb track record of earnings growth (its bottom line has grown at an annualised rate of 20.9% in the last 10 years), its business model offers resilience, and earnings forecasts of 19.7% per annum over the next two years show that it remains a top notch growth play, too.
3. Also set to benefit from a weaker Aussie dollar is Amcor Limited (ASX: AMC), since a large chunk of its revenue is derived from outside of Australia. Furthermore, 30% of its top line is generated from emerging economies, which means that Amcor could be set to deliver excellent earnings growth over the long run, which appears to justify its current P/E ratio of 20.3. And, with Amcor also having a beta of 0.9, a forward dividend yield of 3.9% and a relatively defensive business model due to packaging being a staple product, it could add considerable value to your portfolio.
