We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
High risk securities are known to offer attractive returns when the market is walking on the bullish path. This does not however mean that a portfolio of low-risk assets cannot surprise investors with decent returns. In fact, investors should also sportingly accept below market returns in a bearish environment.
This write-up breaks the myth that only high risk stocks bring high returns. Healthy returns can also be earned with a low-risk portfolio only when some other parameters are kept in mind.
Beta Understanding
Beta measures the volatility or risk of a particular asset in comparison 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 below 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 decline 60%, which is devastating.
Building a Low-Risk Portfolio
We have taken beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. But this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters 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 one 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.
Here are five of the 14 stocks that qualified the screening:
Bob Evans Farms Inc. is the owner and operator of restaurants under the Bob Evans brand in the U.S. This New Albany, OH-based company beat the Zacks Consensus Estimate in each of the prior four quarters, with an average positive surprise of 14.74%. Moreover, for the current fiscal 2017, Bob Evans is forecasted to post 11% year-over-year earnings improvement.
Headquartered in São Paulo, Brazil, Fibria Celulose SA is involved in the production and export of short fiber pulp. For 2016, the company is expected to post 99.1% year-over-year earnings growth. For the trailing four quarters, Fibria Celulose posted average positive earnings surprise of 20.49%.
II-VI Incorporated is the developer and manufacturer of engineered materials and optoelectronic components and products all over the world. The company, headquartered in Saxonburg, PA, has managed to beat the Zacks Consensus Estimate in all of the preceding four quarters with an average positive surprise of 59.23%. Additionally, the Zacks Consensus Estimate for II-VI Incorporated’s third-quarter fiscal 2017 earnings has been revised upward over the last 30 days.
Logitech International SA (LOGI - Free Report) is the designer and manufacturer of products that enable people to get connected through digital platforms globally. The company, based in Apples, Switzerland, was able to beat the Zacks Consensus Estimate in each of the previous four quarters with an average positive earnings surprise of 131.60%. On top of that, the Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2017 earnings has been raised over the prior 30 days.
Alliance Resource Partners LP (ARLP - Free Report) is the producer and marketer of coal in the U.S. For the last four quarters, the company has an average positive earnings surprise of 10.36%. For the first quarter of fiscal 2017, the Zacks Consensus Estimate for earnings has been revised upward over the last 30 days.
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.
Zacks Restaurant Recommendations:In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Low Beta Stocks to Fight Market Volatility
High risk securities are known to offer attractive returns when the market is walking on the bullish path. This does not however mean that a portfolio of low-risk assets cannot surprise investors with decent returns. In fact, investors should also sportingly accept below market returns in a bearish environment.
This write-up breaks the myth that only high risk stocks bring high returns. Healthy returns can also be earned with a low-risk portfolio only when some other parameters are kept in mind.
Beta Understanding
Beta measures the volatility or risk of a particular asset in comparison 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 below 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 decline 60%, which is devastating.
Building a Low-Risk Portfolio
We have taken beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. But this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters 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 one 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.
Here are five of the 14 stocks that qualified the screening:
Bob Evans Farms Inc. is the owner and operator of restaurants under the Bob Evans brand in the U.S. This New Albany, OH-based company beat the Zacks Consensus Estimate in each of the prior four quarters, with an average positive surprise of 14.74%. Moreover, for the current fiscal 2017, Bob Evans is forecasted to post 11% year-over-year earnings improvement.
Headquartered in São Paulo, Brazil, Fibria Celulose SA is involved in the production and export of short fiber pulp. For 2016, the company is expected to post 99.1% year-over-year earnings growth. For the trailing four quarters, Fibria Celulose posted average positive earnings surprise of 20.49%.
II-VI Incorporated is the developer and manufacturer of engineered materials and optoelectronic components and products all over the world. The company, headquartered in Saxonburg, PA, has managed to beat the Zacks Consensus Estimate in all of the preceding four quarters with an average positive surprise of 59.23%. Additionally, the Zacks Consensus Estimate for II-VI Incorporated’s third-quarter fiscal 2017 earnings has been revised upward over the last 30 days.
Logitech International SA (LOGI - Free Report) is the designer and manufacturer of products that enable people to get connected through digital platforms globally. The company, based in Apples, Switzerland, was able to beat the Zacks Consensus Estimate in each of the previous four quarters with an average positive earnings surprise of 131.60%. On top of that, the Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2017 earnings has been raised over the prior 30 days.
Alliance Resource Partners LP (ARLP - Free Report) is the producer and marketer of coal in the U.S. For the last four quarters, the company has an average positive earnings surprise of 10.36%. For the first quarter of fiscal 2017, the Zacks Consensus Estimate for earnings has been revised upward over the last 30 days.
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/.
Zacks Restaurant Recommendations:In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »