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Buy 5 Low-Beta Stocks, Get Rid of Market Volatility
The investment world believes in the idea that for getting lucrative returns, investments in risky securities are essential. The idea works well when the market is bullish but the converse scenario should also be taken into account.
Following intense research, we have developed a strategy that low-risk stocks could also lead to handsome returns if some other specific criteria are considered.
Meaning of 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.
The Winning Strategy
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 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.
Here are five of the 15 stocks that fit the bill:
Operations ofPilgrim's Pride Corporation (NASDAQ:(PPC - Free Report) – Free Report) — headquartered in Greeley, CO — include production and distribution of frozen chicken products in the United States. For 2017, we are expecting the company to witness year-over-year earnings improvement of more than 38%. Also, the Zacks Consensus Estimate of earnings for 2017 has been revised upward over the last 30 days.
Headquartered in Springdale, AR, Tyson Foods Inc. (NYSE:(TSN - Free Report) – Free Report) is the biggest U.S. company that produces, distributes and markets chicken, beef, pork as well as prepared foods. For the fiscal year ended September 2017, the company’s earnings will likely grow almost 16%. On top of that, over the past 30 days, Tyson Foods’ full-year earnings estimates have been revised upward.
Central Garden & Pet Company(NASDAQ:(CENT - Free Report) – Free Report) — based in Walnut Creek, CA — is a leading producer and marketer of premium and value-oriented products focused toward the lawn & garden and pet supplies markets in the United States. The company managed to beat the Zacks Consensus Estimate for earnings over the last four quarters with an average positive surprise of 122.17%. Also, for the fiscal year ended September 2017, Central Garden’s earnings are expected to grow almost 20%.
Headquartered in BeijingTAL Education Group (NYSE:(TAL - Free Report) – Free Report) is the provider of services related to tutoring for students in the People's Republic of China. The Zacks Consensus Estimate for earnings for fiscal year ended February 2018 has been revised upward over the past 30 days. Also, for the fiscal year, we are expecting the company to witness 56.4% year-over-year earnings improvement.
Mercury General Corporation (NYSE:(MCY - Free Report) – Free Report) — headquartered in Los Angeles, CA — is involved in activities like writing risk statements of automobile insurance. The company surpassed the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 1.06%.
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 »
Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Click here for your free subscription to Profit from the Pros.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
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Zacks.com featured highlights: Pilgrim's Pride, Tyson Foods, Central Garden & Pet, TAL Education Group and Mercury General
For Immediate Release
Chicago, IL – August 15, 2017 - Stocks in this week’s article include Pilgrim's Pride Corporation (NASDAQ:(PPC - Free Report) – Free Report), Tyson Foods Inc. (NYSE:(TSN - Free Report) – Free Report), Central Garden & Pet Company (NASDAQ:(CENT - Free Report) – Free Report), TAL Education Group (NYSE:(TAL - Free Report) – Free Report) and Mercury General Corporation (NYSE:(MCY - Free Report) – Free Report).
Screen of the Week of Zacks Investment Research:
Buy 5 Low-Beta Stocks, Get Rid of Market Volatility
The investment world believes in the idea that for getting lucrative returns, investments in risky securities are essential. The idea works well when the market is bullish but the converse scenario should also be taken into account.
Following intense research, we have developed a strategy that low-risk stocks could also lead to handsome returns if some other specific criteria are considered.
Meaning of 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.
The Winning Strategy
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 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.
Here are five of the 15 stocks that fit the bill:
Operations ofPilgrim's Pride Corporation (NASDAQ:(PPC - Free Report) – Free Report) — headquartered in Greeley, CO — include production and distribution of frozen chicken products in the United States. For 2017, we are expecting the company to witness year-over-year earnings improvement of more than 38%. Also, the Zacks Consensus Estimate of earnings for 2017 has been revised upward over the last 30 days.
Headquartered in Springdale, AR, Tyson Foods Inc. (NYSE:(TSN - Free Report) – Free Report) is the biggest U.S. company that produces, distributes and markets chicken, beef, pork as well as prepared foods. For the fiscal year ended September 2017, the company’s earnings will likely grow almost 16%. On top of that, over the past 30 days, Tyson Foods’ full-year earnings estimates have been revised upward.
Central Garden & Pet Company(NASDAQ:(CENT - Free Report) – Free Report) — based in Walnut Creek, CA — is a leading producer and marketer of premium and value-oriented products focused toward the lawn & garden and pet supplies markets in the United States. The company managed to beat the Zacks Consensus Estimate for earnings over the last four quarters with an average positive surprise of 122.17%. Also, for the fiscal year ended September 2017, Central Garden’s earnings are expected to grow almost 20%.
Headquartered in BeijingTAL Education Group (NYSE:(TAL - Free Report) – Free Report) is the provider of services related to tutoring for students in the People's Republic of China. The Zacks Consensus Estimate for earnings for fiscal year ended February 2018 has been revised upward over the past 30 days. Also, for the fiscal year, we are expecting the company to witness 56.4% year-over-year earnings improvement.
Mercury General Corporation (NYSE:(MCY - Free Report) – Free Report) — headquartered in Los Angeles, CA — is involved in activities like writing risk statements of automobile insurance. The company surpassed the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 1.06%.
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 »
Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!Click here for your free subscription to Profit from the Pros.
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Visit: https://www.zacks.com/performance
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.