Low Volatility Stocks To Watch As High Market Valuations Raise The Stakes

With the market’s CAPE ratio sitting at 41.4, close to extremes last seen around the dot-com era, many investors are asking how to stay invested without feeling overexposed if sentiment turns. Elevated valuations and widespread concern about a downturn by 2026 have made low volatility stocks more interesting. This article walks through three companies from a low volatility screener that appear closely tied to this story and explains why they might matter for your portfolio decisions.

The three stocks covered below are just a sample, and the full low volatility screen surfaced 43 more larger companies with similarly interesting risk and income profiles that are not covered in this article. If you want to identify ideas that better fit your own risk tolerance, head straight to the Low-Volatility Stocks screener to filter and analyze the highest conviction plays.

Medibank Private (ASX:MPL)

Overview: Medibank Private is one of Australia’s major private health insurers, offering hospital and extras cover under the Medibank and ahm brands, along with services like telehealth, in home care and management programs for government and corporate clients.

Operations: Medibank Private generates most of its A$8.9b revenue from Health Insurance at A$8.4b, with A$547.9 million from Medibank Health services in Australia and A$188.2 million from net investment income.

Market Cap: A$14.5b

Medibank Private stands out in a market where valuations are stretched and many investors are worried about a potential correction by 2026. The core health insurance business often behaves more defensively than the broader market. Medibank Health adds exposure to telehealth and in home care that ties in with longer term shifts in how Australians access healthcare. Earnings quality indicators are described as solid and return on equity above 20% suggests the business is using capital efficiently, although current margins are under pressure and dividends are not well covered by cash flows. For investors who want lower volatility exposure, but still care about valuation, regulation and competition risk, Medibank Private may warrant closer consideration before any decision to move on to more cyclical options.

Medibank Private’s strong returns and lower volatility story feels incomplete without considering what the market might be missing on quality, pricing power and regulation. Read the 2 key rewards and 1 important major warning sign

Build your own low volatility shortlist around Medibank Private

Medibank Private and the two other stocks in this article all came from a single screener, but the real edge is in building filters that fit how you think about risk, returns and income. Use our flexible Screener to combine valuation, balance sheet, dividend and risk signals into your own watchlist, or tap into our curated Investing Ideas for ready made starting points.

Power Corporation of Canada (TSX:POW)

Overview: Power Corporation of Canada is a diversified financial holding company based in Montreal that owns and manages insurance, wealth management, asset management and alternative investment businesses across North America, Europe and Asia through its Great-West Lifeco, IGM Financial and GBL segments.

Operations: Power Corporation of Canada generates most of its roughly CA$40.9b in revenue from Great-West at about CA$31.8b, with IGM contributing around CA$4.1b, alternative asset investment platforms and other businesses about CA$3.3b, and smaller amounts from the holding company and consolidation adjustments.

Market Cap: CA$58.3b

Power Corporation of Canada sits squarely in the low volatility camp at a time when the market CAPE ratio of 41.4 has many investors worried about a sharp correction by 2026. Its core insurance and wealth platforms provide fee and premium income that can be relatively steadier, while buybacks of around 2.2% of the float this year and a 2.86% dividend yield show a focus on returning capital. At the same time, earnings growth has been sluggish, margins have softened to 6.5%, and analysts have flagged funding and regulatory risk along with insider selling. For investors weighing how to stay invested if valuations reset, the key issue is whether this mix of defensive earnings, alternative assets and fintech exposure is sufficient to justify the current P/E and analyst optimism on the stock’s upside potential.

Power Corporation of Canada’s mix of steady insurance cash flows and slower earnings growth leaves a lot riding on how investors read the fine print on risk. Go straight to the 2 key rewards and 1 important warning sign

Unum Group (UNM)

Overview: Unum Group is a US based insurer that provides employers and their employees with financial protection products such as group disability, life, accident, cancer and critical illness cover, along with supplemental and voluntary benefits across the US, UK and Poland.

Operations: Unum Group generates most of its roughly US$13.3b revenue from Unum US at about US$8.1b, with Colonial Life contributing about US$2.1b, the Closed Block around US$1.7b, Unum International about US$1.3b, and smaller amounts from Corporate and unallocated net investment results.

Market Cap: US$14.3b

Unum Group sits squarely in the low volatility camp at a time when the market CAPE ratio of 41.4 has many investors worried about a sharp pullback by 2026. The attraction is a mix of recurring premium income, a 2.23% dividend and active capital returns through buybacks, all backed by a long operating history and management that has been steadily reducing long term care risk through multi billion dollar reinsurance deals. The catch is that margins have compressed, recent earnings growth has been weak and funding relies fully on external borrowing, which leaves Unum more exposed if credit markets tighten. For investors who want steadier cash flows as valuations stretch, the real question is how this trade off between income, growth forecasts and balance sheet risk stacks up once the details are unpacked.

Unum Group’s steady premiums and active buybacks could be masking a much bigger story about income and balance sheet risk. Get the full picture in the 3 key rewards and 1 important warning sign

Seeking Fresh Alternatives Before Momentum Shifts

Markets move fast and the most interesting stock ideas often break out before most investors notice. Do not get caught reacting after prices start flying. Act now.

• Spot companies quietly building momentum while prices are still grounded by running a quick pass through the 9 high quality undervalued stocks.
• Track where real capital strength sits by focusing on businesses in the list of solid balance sheet and fundamentals (19 results) before the crowd piles into safer balance sheets.
• Ride early waves in a potential new commodity cycle by checking which producers make the cut in the curated 9 top copper producer stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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