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​4 stocks that can help you cope with today's volatility

Severe volatility now rules the stock market, so investors -- if they haven't done so already -- need to urgently build a "strategy for volatile times" to protect and, at the same time, advance their core equity portfolios.

The January 2016 shock that pounded stocks illustrated how quickly the market's volatility can surprise even when its immediate cause reflected great concern over growing risks in other countries, particularly China.

But that's not to say that we're on the verge of calamity. Rather, it suggests that investors should look for the safest ways to grab the big opportunities that accompany risk. "Rational investors should be using this turbulence to their advantage," advises Stephen Leeb, president of Leeb Asset Management, which also publishes the investment newsletter, The Complete Investor.

Investors have no reason to head for the exits because, Leeb said, there are stocks that "offer both great upside potential along with downside protection conferred by their compelling valuations" as well as great prospects for growth.

Nigel Green, co-founder and CEO of de Vere Group, an independent advisor with more than 70 offices worldwide with $10 billion under management, said during these more volatile times, investors have several reasons to build up their portfolios in order to expand wealth. No one can accurately predict when the markets will finally hit bottom, he said, but "we do know that over the longer term, the performance of stock markets is fairly predicable: They go up."

He perceives the see-sawing markets as buying opportunities and a chance for investors "not to sit on the sidelines but to ride the wave of volatility" to solidify their portfolios for future gains. The deVere Group recently released findings of a new poll it conducted. It found that three-quarters of high-net-worth individual investors plan to increase their contributions to their investment portfolios in the first of half of 2016.

So, what would define and comprise a "strategy for volatile times"? The formula should reduce a portfolio's vulnerability to abrupt downswings, while at the same time taking opportunities to advance when the market ends its swift declines. This means the portfolio's components must have valuations much lower than their highs and possess characteristics that show sufficient potential for growth. And the companies should be leaders in the industries they operate in. These attributes generally contribute to the stability of their stocks in good or challenging times.

Many high-profile large-cap stocks have these attributes. Here are four that could form the base of a strategic formula for these volatile times: Apple (AAPL), Gilead Sciences (GILD), Microsoft (MSFT) and Starbucks (SBUX). They all have great potential for upside growth, robust business fundamentals and compelling valuations, such as reasonable if not comparatively low price-earnings ratios and modest price-earnings-to-growth ratios.

Apple is an example of a premier stock (it has the world's largest capitalization) whose valuation continues to stay at attractive levels. It's currently trading at less than 10 times its estimated 2016 earnings. That's partly because of higher-than-expected inventories of its iPhone 6 and 6s, which accounted for 66 percent of Apple's revenues last year on 230 million units sold. The inventories dovetailed with fears over China's economic slowdown, which pulled down Apple's stock price to as low $92 a share. But it has since edged higher and closed on Feb. 26 at $97.

Angelo Zino, equity analyst at S&P Capital IQ, rates the stock as a "strong buy," with a 12-month price target of $130 a share. He said apart from Apple's attractive valuation, he favors the company's leasing programs with telecom carriers, and he sees a positive outlook for Apple's potential product offering this year, including new iPhones and a next-generation Watch. Apple's superior ecosystem, added Zino, and new product launches will be enough to sustain high iPhone customer retention rates.

Gilead Sciences, a leader among the pharmaceuticals, focuses primarily on human immunodeficiency diseases such as HIV, liver diseases such as chronic hepatitis C and hepatitis B, and oncology, inflammation and serious cardiovascular and respiratory conditions. Its stock, currently at $88 a share, is way down from its 52-week high of $123.

Ronnie Moas, analyst at Standpoint Research, who rates Gilead as a "buy" with a price target of $110, noted that the stock is attractive at its current price. He said Gilead ranks high among the top 10 names in the S&P 500-stock index. Jeffrey Loo, equity analyst at S&P Capital IQ, who recommends the stock as a "strong buy," has a much higher price target of $155 a share. He believes Gilead will maintain its "dominance" in the hepatitis market and remains "attractively valued."

Microsoft has managed to upgrade its image on Wall Street. Mark Murphy, analyst at JPMorgan Chase, who rates Microsoft as a "strong buy," said the company's fourth-quarter results have reaffirmed his view that Microsoft is favorably reshaping its long-term future and is now best positioned to benefit as "one of the leaders of the mobile-first, cloud-first world." Murphy has a price target of $62 a share. The stock currently is trading at $51.

Phillip Winslow, analyst at Credit Suisse, is also high on Microsoft, rating the stock as "outperform." He noted that although Microsoft remains in transition, he views its fourth-quarter results as further evidence of the convergence of several forces "that position the company for continued growth and margin leverage in the second half of 2016 and beyond." Winslow recently boosted his target price to $62.50 a share from $60.

Microsoft is a "safe stock to own, especially in a down market," added Katherine Eggbert, analyst at Piper Jaffray. Rating the stock as "overweight," she has raised her price target to $66 a share from $64. Daniel Ives, analyst at FBR & Co., who rates Microsoft as "outperform," with a price target of $63, is impressed with Microsoft's stronger-than-expected margin/free cash flow performance. He noted that it "speaks to Microsoft's ability to be a leaner technology giant going forward as it embarks on its next stage of cloud transformation with Windows 10."

Starbucks, the java giant, has performed well despite the choppy market environment. The stock is among the "best-of-breed companies" that investors have flocked to during the market's volatile mood. "This high-quality restaurant operator (is) likely high on many buy lists," said Ian Gendler, executive director of research at Value Line Investment Research. "Looking ahead, we think Starbucks' earnings will continue to climb, thanks to strong same-store sales, favorable coffee costs and share repurchases." (Same-store sales are key metric of sales at locations open a year or more.)

He expects profits to advance 20 percent in 2016 and 16 percent in 2017, so he ranks Starbucks as "No. 1 in both timeliness and safety." The stock also provides good risk-adjusted returns to the 2019-2021 time frame, said Gendler.

In addition, Starbucks has great potential for much further growth with its accelerating expansion overseas, including its penetration of markets in China, India and Russia. "And with its more affluent customer base," said Tuna Amobi, equity analyst at S&P Capital IQ, "Starbucks should be less vulnerable to some weakness in U.S. consumer spending." Amobi rates the stock as a "buy," with a price target of $68.

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