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Less-Volatile Stocks for a Volatile World

NEW YORK ( TheStreet) -- These are volatile times. In September Apple (AAPL) seemed unassailable and spiked to $705 per share. Then there was the maps fiasco, sentiment waned and suddenly it became a $520 stock. The fiscal cliff problem was solved, then it wasn't. Europe was on the brink of salvation, then implosion.

As we enter what I expect will be a recessionary environment in 2013, I am focusing on companies that offer nondiscretionary products and services, because their customers and cash flows tend to be more reliable.

One way to do this is with newly created investment motifs, which are similar to indices and are very cost-effective. You can read about this type of investing at Motif Investing.

One motif is called simply Utility Bills. It's different from most utility indices and ETFs because it encompasses more than just payments homeowners and renters make to gas and electricity utilities. It also includes services such as cable TV, telephone and trash pickup.

This motif gives you exposure to companies that benefit from people's desire to come home to a brightly lit and clean house, a hot bath, cable TV and maybe a cup of tea.

Many people consider these nondiscretionary services, so demand for them is likely to remain more consistent in a sluggish economy than demand for, say, luxury travel, dining out and new cars.

The 25 stocks that make up this motif, including AT&T (T - Get Report), Comcast (CMCSA - Get Report) and Waste Management (WM), are believed to offer investors the benefits of dividends and lower volatility.

To see the stability of cashflows that can come from providing, say, Internet services, consider Comcast and its very popular on-demand services.

Let's say a customer is behind on his monthly payment to the Internet giant but is spending a snowy Saturday afternoon at home. When he tries to watch The Dark Knight Rises, he will be instructed to contact Xfinity (the Comcast brand for a variety of Internet services) to pay up.

He'll be able to use a credit card to get current on his bill and will be watching his movie in 15 minutes. Meanwhile, Comcast still has a customer and a way of getting future bills paid.
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SYM TRADE IT LAST %CHG
CMCSA $63.21 1.28%
T $34.66 -0.23%
AAPL $118.44 -2.36%
FB $94.14 0.14%
GOOG $631.21 0.90%

Markets

Chart of I:DJI
DOW 17,598.20 -91.66 -0.52%
S&P 500 2,098.04 -5.80 -0.28%
NASDAQ 5,115.3820 -12.8990 -0.25%

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