By Ian Salisbury

It has been a tough market for quality stocks, but owning top-shelf names like JPMorgan Chase, Cisco Systems and Walt Disney could still make a lot of sense for investors looking for steady performers that can deliver in almost all market conditions.

Plenty of academic research shows stocks that have solid earnings and healthy balance sheets -- tend to outperform in the long run. Lately, however, the approach hasn't delivered.

So far this year, the Invesco S&P 500 Quality ETF has returned 11.5%, far behind the broad market's 17% total return. Over the past five years, returns for quality stocks have lagged behind by about one percentage point a year, on average.

There are plenty of theories about why quality has struggled. One is that the runaway performance of top tech names has made it difficult for any investing strategy that doesn't lean directly into artificial intelligence to keep up.

Another is gloomy consumer sentiment. Concern about people's willingness to spend, as well as shoppers actually tightening their belts, has weighed on blue-chip consumer stocks like Procter & Gamble, Coca-Cola and Colgate-Palmolive. All three are otherwise known as reliable performers.

In a note Friday, Trivariate Research offered another theory. It argues that the underperformance results from new market dynamics tied to volatility.

It has long been known that a big part of nearly every stock's returns is driven by the broad market's own ups and downs. The change Trivariate flagged is that the number of high-volatility stocks, which tend to move more dramatically than the market on any given day, has surged. At the same time, so has the number of stocks exhibiting below-average volatility.

That leaves relatively few stocks in the middle, with average amounts of volatility, Trivariate says. While the dynamic hasn't necessarily hurt quality stocks, it has made it difficult for their strong fundamentals to shine through because so much of investors' recent returns have been driven by the market's overall direction.

"Quality matters less in the current market environment," writes Trivariate founder Adam S. Parker.

So should investors give up on the strategy? Not necessarily.

Quality's travails have been frustratingly persistent, stretching back to around 2020. But most investors' timelines are measured in decades, not years. The academic research that touts the so-called quality factor is also built on decades of returns, not just the past few years.

What is more, there is no telling how long the current stock market dynamics will persist. While the S&P 500 has been hovering near record levels, plenty of investors are worried the market looks overpriced and seems disconnected from the rest of the economy.

If things were to shift, blue chips with strong earnings and balance sheets could start to look awfully good. With that in mind, here is Trivariate's target list of high-quality stocks that also boast average volatility and fall outside the hot "growth" category dominated by big tech names.

10 quality stocks with medium volatility

JPMorgan Chase / JPM

Market capitalization: $850 billion

Expected 2026 earnings growth: 4.9%

Stock price: $310

Forward price/earnings ratio: 15

General Electric / GE

Market cap: $331 billion

Expected 2026 earnings growth: 16%

Stock price: $309

Forward P/E: 44

Cisco Systems / CSCO

Market cap: $288 billion

Expected 2026 earnings growth: 6.1%

Stock price: $73

Forward P/E: 18

Thermo Fisher Scientific / TMO

Market cap: $211 billion

Expected 2026 earnings growth: 8.2%

Stock price: $563

Forward P/E: 23

Walt Disney Co. / DIS

Market cap: $206 billion

Expected 2026 earnings growth: 11%

Stock price: $112

Forward P/E: 17

$Danaher Corp(DHR-W)$. / DHR

Market cap: $153 billion

Expected 2026 earnings growth: 9%

Stock price: $216

Forward P/E: 26

Southern Copper / SCCO

Market cap: $114 billion

Expected 2026 earnings growth: 3.9%

Stock price: $138

Forward P/E: 26

Prologis / PLD

Market cap: $119 billion

Expected 2026 earnings growth: 11%

Stock price: $124

Forward P/E: 42

Bank of New York Mellon / BK

Market cap: $75 billion

Expected 2026 earnings growth: 11%

Stock price: $107

Forward P/E: 14

Marriott International / MAR

Market cap: $72 billion

Expected 2026 earnings growth: 12%

Stock price: $259

Forward P/E: 24

Write to Ian Salisbury at ian.salisbury@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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October 31, 2025 15:54 ET (19:54 GMT)

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