2 Low-Volatility Stocks to Play it Safe in April

Empire Companies (TSX:EMP.A) and another top low-volatility stock to defend your portfolio this month.

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Many new investors may be at risk of overestimating their ability to take on investment risk. It’s easy to take risks in a time like this after the TSX Index rose more than 6% in the very first quarter of this year. Meanwhile, south of the border, the S&P 500 and Nasdaq 100 indices are even hotter, blasting off more than 10% in the first quarter (Q1) of 2024. Undoubtedly, that’s a return that would be respectable for a full year, let alone just one quarter. Only time will tell where markets finish the year.

As market strategists look to upgrade their year-ahead price targets for the market, perhaps stocks could have further to run as all things artificial intelligence (AI) look to keep the momentum running strong. And if Canada’s economy manages to avoid a nasty recession, there’s a good chance the TSX Index’s breakout could take it to impressive heights, perhaps above the 25,000 level. Only time will tell. Regardless, investors seeking to rush toward the exits before a potential pullback should look to play some defence with some of the neglected low-volatility stocks out there today.

Of course, no stock is safe from a particularly nasty market crash. If you remember the chaos of February (and March) 2020, you’ll know that technically, any stock (or even bond funds) can nosedive when fear is in the heart of investors. Indeed, looking back, it’s easy to say you would have bought on the vicious decline. However, dip-buyers didn’t really have much time to do their buying as the V-shaped recovery took hold the moment the U.S. Federal Reserve came to the rescue.

Either way, long-term investors shouldn’t overreact either way to subtle hints given by central banks regarding their rate-cut schedule. Instead, it makes sense to pursue underpriced stocks that can do well regardless of what “weather” the stock market is in for in the latter three quarters of 2024.

Without further ado, here are two great stocks to play it safe this April.

Empire Companies

Empire Companies (TSX:EMP.A) has had an awful start to this year, with shares down more than 5% year to date. Though the grocer leaves a lot to be desired, especially relative to better-performing rivals, I see deep value in shares, which are going for 10.9 times trailing price to earnings (P/E).

Indeed, the grocery juggernaut behind Safeway and Sobeys may be able to get back on the growth track, even as the heavy blow of inflation weighs on its customers. Inflation won’t last forever. But as things normalize, I view EMP.A stock as a contrarian value way to play one of the most defensive corners of the market. There’s also the 2.2% dividend yield to look forward to.

Barrick Gold

Gold has been shining for its investors lately, and Barrick Gold (TSX:ABX) stands out as a way to play the precious metal while getting paid a nice dividend (2.46% yield) for doing so. In fact, I view high-quality gold miners, such as Barrick, as even better ways to play higher gold prices.

Indeed, if gold stays high and keeps rising, it’s just a matter of time before the top miners catch up. The stock has room to run if gold keeps making highs. Year to date, the stock is down modestly, making it a catch-up play for the gold bulls seeking more value and upside than bullion itself.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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