This Stock Goes Up When the Market Goes Down

Beta is the measure of a stock's volatility. Stocks with high beta, over 1.0, means the stock is more volatile than the broader market. Stocks with low beta, below 1.0, means they are less volatile and have smaller price swings than the market.

Then there are stocks with negative beta, which means they move in the opposite direction of the market. Right now, with the S&P 500 and Nasdaq Composite in negative territory, that's not a bad thing.

Certainly, it's a short-term snapshot, and the markets will head north again, but to navigate the market downturns, a stock with negative beta is a good diversifier to lift your portfolio when most of it is down.

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There is one stock that went public about a year ago that fits that bill. It has a negative beta and is up about 31% year to date and 46% over the past 12 months. Meet Smithfield Foods (NASDAQ: SFD).

Makin' bacon

Smithfield Foods is a leading pork processor and hog producer, making packaged meats, like hot dogs, sausages, bacon, and sandwich meats. Its brands include Nathan's Famous hot dogs, Armour, Farmer John, Farmland, Cook's, Carando, Eckrich, and Smithfield, among others.

Smithfield Foods' roots date back to 1900, but it was officially founded in 1936. It went public in 1999 and traded on the New York Stock Exchange until 2013 when it went private. But in January 2025, it launched an initial public offering (IPO) and returned to the public markets.

So, its not exactly a new player. In fact, it is the largest pork processor and hog producer in the U.S. with a 23% market share. It is also the second-largest provider of packaged meats with a 20% market share.

Smithfield closed out a strong fiscal 2025 with net sales of $15.5 billion, up 10%, and earnings up 54% to $0.83 per share, year over year. Furthermore, the company had record-operating profit last year.

The performance is made all the more impressive by the headwinds the company faced in 2025 and into 2026. Tariffs impacted its business in China and forced the company to employ alternative strategies and pivot to other international markets. Also, inflation and tariffs led to higher costs for supplies. In addition, the uncertain situation in the Strait of Hormuz has led to increased expenses for fuel and packaging.

But through its "rightsizing" strategy, the company was able to shrink its internal hog production by 40%, which lowered costs, increased productivity, and led to an improvement in operating profit.

Negative beta

For 2026, Smithfield anticipates low-single-digit revenue gains and adjusted operating profit of $1.325 billion to $1.475 billion, which would be up 5% at the midpoint.

Also, Smithfield has a great dividend of $1.25 per share at a high yield of 4.25%.

In addition, it has a negative beta of -0.30, which means that if the market rises, say 1%, Smithfield stock would fall by 0.30%. But if the market falls by 1%, Smithfield stock would rise by 0.30%. Essentially, it means that the company is in an industry that allows it to perform well when the market doesn't. Smithfield has only been public for a year, so it's a small sample size, but it is well positioned for growth.

The stock is up 31% year to date, and it is trading at just 11 times earnings and 10 times forward earnings, so it is a great value. It also has a strong dividend with a high yield and tons of cash flow to support it. The company ended 2025 with more than $1 billion in net cash flows from operating activities, up from about $916 million the previous year.

Also, analysts are bullish on the stock. Some 88% of analysts rate it as a buy, with a median price target of $31 per share. That's only 5% over the current price, but in this market, that might not be so bad.

If you are looking for stocks that zig when the markets zag, Smithfield Foods might be one for you to consider.

Dave Kovaleski 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.