Market Analysis: General Dynamics and the Best Low-Beta Stocks in Focus

The past few years have been challenging for the market, but recent developments suggest a recovery is underway. Key to this are the Fed's interest rate cuts, which have elicited optimistic reactions from investors. With a new bullish sentiment, Brian Belski of BMO recently raised his S&P 500 price target for 2024 from 5,600 to 6,100 points, as he sees parallels to times of high market valuations, such as in the mid-1990s. He also notes broader market participation and a possible smooth landing for the U.S. economy. Tom Lee of Fundstrat is also optimistic, forecasting that the market could rise to nearly 15,000 points by 2030. He attributes this to demographic changes, consumer spending by Millennials, and technological advancements. In particular, he sees significant opportunities in the increased use of AI and technology to compensate for global labor shortages. Prashant Bhayani of BNP Paribas Wealth Management emphasized the market's good liquidity and tight credit spreads on CNBC. Although hiring in the U.S. is occurring more slowly, he attributes the rise in unemployment more to a growing labor supply than to corporate layoffs. He also noted that while some sectors are overvalued, they could benefit from broader market participation outside of AI stocks. Bhayani suggests that potential market volatility could be triggered by a credit event, similar to those in 2000 or 2007. However, current credit spreads and a robust banking system support the outlook for a soft landing. For our current analysis, we used the Yahoo Finance Stock Screener to create a list of over 30 mid- to mega-cap stocks with a 5-year beta between 0.2 and 0.8, which we narrowed down to the 10 most-held stocks by institutional investors. A notable player on this list is General Dynamics Corporation. The U.S. aerospace and defense company is headquartered in Reston, Virginia, and is distinguished by its extensive product range, encompassing both military and civilian aircraft, submarines, and armored vehicles. Its well-known products include Gulfstream business jets, Virginia- and Columbia-class nuclear submarines, and M1 Abrams tanks. General Dynamics currently counts 48 hedge funds among its investors, collectively representing a value of $9.114 billion. This includes Longview Asset Management, which holds 28.1 million shares valued at $8.152 billion. In 2024, General Dynamics secured several significant partnerships and contracts. Notably, it has collaborated with Lockheed Martin to manufacture solid rocket motors and has received various orders from the Space Development Agency and the U.S. Navy. In summary, General Dynamics ranks 6th on our list of the best low-beta stocks. Despite GD's potential, we see higher return opportunities in AI stocks. Those looking for promising AI titles should check our report on the cheapest AI stocks with a price-to-earnings ratio below 5.