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Withstand Market Volatility with These 5 Low-Beta Stocks
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“Living with fear stops us taking risks, and if you don't go out on the branch, you're never going to get the best fruit”. Sarah Parish
This belief resonates in the investment community. If somebody is apprehensive of risky stocks, lucrative returns will also be far off. The statement is true only when the market is walking on the bullish path. Hence, the opposite situations also need to be considered when returns from risky securities fall more than the market.
This article has proved that investing in low risk assets can be fruitful only when some other parameters are considered.
What is Beta?
Beta measures the volatility or risks to a security relative to the market (we are considering the S&P 500 here). That is, beta measures the extent to which the price of a stock moves with respect to the market.
If the beta is equal to 1 it means that the stock is as volatile as the market. So, a stock is relatively more volatile if it has beta greater than 1 and less volatile if beta is less than 1.
For example, if the beta is 1.8 then the stock will witness 80% more movement than the market. Hence, we can say that if the market goes up, the stock will outperform by 80%. Conversely, if the market plunges, the stock will lose much more value than the market.
Screening Criteria
In order to find stocks with lower-than-market volatility, we added beta between 0 and 0.6 as our main criterion for screening. However, we need to keep in mind that low beta is not the only metric to be considered for choosing stocks in a volatile market. Hence to reach the winning strategy, we have considered a few additional criteria.
Percentage Change in Price in the last 4 Weeks: We considered those stocks that saw positive price movement over the last one month.
Average 20 Day Volume greater than or equal to 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 five of the 18 stocks that fit the bill:
Headquartered in Greeley, CO, Pilgrim's Pride Corporation (PPC - Free Report) is involved in operations like production, processing and distribution of fresh and frozen chicken products in the U.S. Over the last 30 days, the current quarter’s Zacks Consensus Estimate for earnings has been revised upward. Moreover, for the current year, we are anticipating 21.7% year-over-year earnings improvement.
Energizer Holdings Inc. (ENR - Free Report) – headquartered in St. Louis, MO – is engaged in activities like manufacturing, marketing and distributing household batteries, specialty batteries, and lighting products all over the world. The company managed to beat the Zacks Consensus Estimate in each of the last four quarters with an average beat of 20.50%. On top of that, for the current year, year-over-year earnings growth is projected at 18.80%.
Central Garden & Pet Company (CENT - Free Report) – based in Walnut Creek, CA – primarily produces and markets pet products in the U.S. The company beat the Zacks Consensus Estimate in the last four quarters by an average of 120.45%. Additionally, for the current year, the company is anticipated to post 10.3% year-over-year earnings growth.
The Children's Place Inc. (PLCE - Free Report) – based in Secaucus, NJ – is a retailer of branded apparel items for children that include footwear, accessories and other products. For the current year, the company will likely witness year-over-year earnings growth of 43.7%. Moreover, the company delivered an average positive earnings surprise of 36.28% in the prior four quarters.
Headquartered in Tulsa, OK, ONE Gas Inc. (OGS - Free Report) is a regulated natural gas distribution utility firm in the U.S. The company surpassed the Zacks Consensus Estimate in all the prior four quarters by an average of 12.46%.
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 »
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Withstand Market Volatility with These 5 Low-Beta Stocks
“Living with fear stops us taking risks, and if you don't go out on the branch, you're never going to get the best fruit”. Sarah Parish
This belief resonates in the investment community. If somebody is apprehensive of risky stocks, lucrative returns will also be far off. The statement is true only when the market is walking on the bullish path. Hence, the opposite situations also need to be considered when returns from risky securities fall more than the market.
This article has proved that investing in low risk assets can be fruitful only when some other parameters are considered.
What is Beta?
Beta measures the volatility or risks to a security relative to the market (we are considering the S&P 500 here). That is, beta measures the extent to which the price of a stock moves with respect to the market.
If the beta is equal to 1 it means that the stock is as volatile as the market. So, a stock is relatively more volatile if it has beta greater than 1 and less volatile if beta is less than 1.
For example, if the beta is 1.8 then the stock will witness 80% more movement than the market. Hence, we can say that if the market goes up, the stock will outperform by 80%. Conversely, if the market plunges, the stock will lose much more value than the market.
Screening Criteria
In order to find stocks with lower-than-market volatility, we added beta between 0 and 0.6 as our main criterion for screening. However, we need to keep in mind that low beta is not the only metric to be considered for choosing stocks in a volatile market. Hence to reach the winning strategy, we have considered a few additional criteria.
Percentage Change in Price in the last 4 Weeks: We considered those stocks that saw positive price movement over the last one month.
Average 20 Day Volume greater than or equal to 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 five of the 18 stocks that fit the bill:
Headquartered in Greeley, CO, Pilgrim's Pride Corporation (PPC - Free Report) is involved in operations like production, processing and distribution of fresh and frozen chicken products in the U.S. Over the last 30 days, the current quarter’s Zacks Consensus Estimate for earnings has been revised upward. Moreover, for the current year, we are anticipating 21.7% year-over-year earnings improvement.
Energizer Holdings Inc. (ENR - Free Report) – headquartered in St. Louis, MO – is engaged in activities like manufacturing, marketing and distributing household batteries, specialty batteries, and lighting products all over the world. The company managed to beat the Zacks Consensus Estimate in each of the last four quarters with an average beat of 20.50%. On top of that, for the current year, year-over-year earnings growth is projected at 18.80%.
Central Garden & Pet Company (CENT - Free Report) – based in Walnut Creek, CA – primarily produces and markets pet products in the U.S. The company beat the Zacks Consensus Estimate in the last four quarters by an average of 120.45%. Additionally, for the current year, the company is anticipated to post 10.3% year-over-year earnings growth.
The Children's Place Inc. (PLCE - Free Report) – based in Secaucus, NJ – is a retailer of branded apparel items for children that include footwear, accessories and other products. For the current year, the company will likely witness year-over-year earnings growth of 43.7%. Moreover, the company delivered an average positive earnings surprise of 36.28% in the prior four quarters.
Headquartered in Tulsa, OK, ONE Gas Inc. (OGS - Free Report) is a regulated natural gas distribution utility firm in the U.S. The company surpassed the Zacks Consensus Estimate in all the prior four quarters by an average of 12.46%.
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 »