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Buy These 4 Low-Beta Stocks to Sail Through a Volatile Market
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Uncertainty prevails in the market, with investors waiting for fresh inflation data and corporate earnings. The market could be volatile as the data are likely to determine the path of interest rate hikes by the Federal Reserve. Market pundits are fearing potential recession as a strong job report is possibly encouraging the Fed to continue its aggressive increase in interest rate.
Hence, creating a portfolio of low-beta stocks is of utmost importance as the securities will deliver healthy returns and shield against volatile market conditions. In this regard, stocks like Sanderson Farms, Inc. , Otter Tail Corporation (OTTR - Free Report) , J&J Snack Foods Corp. (JJSF - Free Report) and AMN Healthcare Services, Inc. (AMN - Free Report) are worth betting on.
Beta Understanding
Beta measures the volatility or risk of a particular asset compared to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.
If a stock has beta of 1, then the price of the stock will move with the market. So, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.
For example, if the market offers a return of 20%, a stock with beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.
Screening Criteria:
We have taken beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. However, this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters as well that can add value to the portfolio.
Percentage Change in Price in the Last 4 Weeks greater than zero: This ensures that the stocks saw positive price movement over the last month.
Average 20 Day Volume greater than 50,000: A substantial trading volume ensures that the stocks are easily tradable.
Price greater than or equal to $5: They must all be trading at a minimum of $5 or higher.
Zacks Rank equal to 1: Zacks Rank #1 (Strong Buy) stocks indicate that they will significantly outperform the broader U.S. equity market over the next one to three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are four stocks among 16 that qualified the screening:
Sanderson Farms secures stable cashflows from producing, processing and distributing fresh, frozen and minimally prepared chicken. Backed by higher average selling prices, Sanderson Farms is experiencing increased margins. For fiscal 2022, Sanderson Farms has witnessed increased earnings estimate revisions over the past 30 days.
Otter Tail Corporation is a leading player in electric utility and manufacturing businesses. For 2022 and 2023, Otter Tail has witnessed upward earnings estimate revisions over the past 60 days. In order to secure more stable cashflows, Otter Tail is planning to invest in rate base growth opportunities.
J&J Snack Foods is a well-known name in the snack food industry. J&J Snack has won new customers and launched products, with quarterly net sales exceeding the pre-covid mark.
AMN Healthcare Services, a leader in total talent solutions for healthcare organizations, recently pleased shareholders with the announcement of a $250 million share repurchase program. The portfolio of AMN Healthcare’s diversified solutions is in great demand as healthcare organizations are still facing a massive shortage of labor. In the past 60 days, AMN Healthcare has witnessed upward earnings estimate revisions for 2022 earnings.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Image: Bigstock
Buy These 4 Low-Beta Stocks to Sail Through a Volatile Market
Uncertainty prevails in the market, with investors waiting for fresh inflation data and corporate earnings. The market could be volatile as the data are likely to determine the path of interest rate hikes by the Federal Reserve. Market pundits are fearing potential recession as a strong job report is possibly encouraging the Fed to continue its aggressive increase in interest rate.
Hence, creating a portfolio of low-beta stocks is of utmost importance as the securities will deliver healthy returns and shield against volatile market conditions. In this regard, stocks like Sanderson Farms, Inc. , Otter Tail Corporation (OTTR - Free Report) , J&J Snack Foods Corp. (JJSF - Free Report) and AMN Healthcare Services, Inc. (AMN - Free Report) are worth betting on.
Beta Understanding
Beta measures the volatility or risk of a particular asset compared to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.
If a stock has beta of 1, then the price of the stock will move with the market. So, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.
For example, if the market offers a return of 20%, a stock with beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.
Screening Criteria:
We have taken beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. However, this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters as well that can add value to the portfolio.
Percentage Change in Price in the Last 4 Weeks greater than zero: This ensures that the stocks saw positive price movement over the last month.
Average 20 Day Volume greater than 50,000: A substantial trading volume ensures that the stocks are easily tradable.
Price greater than or equal to $5: They must all be trading at a minimum of $5 or higher.
Zacks Rank equal to 1: Zacks Rank #1 (Strong Buy) stocks indicate that they will significantly outperform the broader U.S. equity market over the next one to three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are four stocks among 16 that qualified the screening:
Sanderson Farms secures stable cashflows from producing, processing and distributing fresh, frozen and minimally prepared chicken. Backed by higher average selling prices, Sanderson Farms is experiencing increased margins. For fiscal 2022, Sanderson Farms has witnessed increased earnings estimate revisions over the past 30 days.
Otter Tail Corporation is a leading player in electric utility and manufacturing businesses. For 2022 and 2023, Otter Tail has witnessed upward earnings estimate revisions over the past 60 days. In order to secure more stable cashflows, Otter Tail is planning to invest in rate base growth opportunities.
J&J Snack Foods is a well-known name in the snack food industry. J&J Snack has won new customers and launched products, with quarterly net sales exceeding the pre-covid mark.
AMN Healthcare Services, a leader in total talent solutions for healthcare organizations, recently pleased shareholders with the announcement of a $250 million share repurchase program. The portfolio of AMN Healthcare’s diversified solutions is in great demand as healthcare organizations are still facing a massive shortage of labor. In the past 60 days, AMN Healthcare has witnessed upward earnings estimate revisions for 2022 earnings.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.