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For generating handsome returns, one has to invest in risky stocks. This seems to be a thumb rule for most investors. The strategy works extremely well for securities or portfolios that are directly correlated with the market. But the converse scenario should also be taken into account.
With extensive research we have come up with a strategy that proves lucrative returns could also be generated from less risky stocks.
Meaning of Beta
Beta indicates the volatility of a particular stock with respect to the market. In other words, beta measures the extent of stock price movement relative to the market (we are considering S&P 500 here).
If a company has a beta of 1, it means that the relative volatility of the stock is the same as that of the S&P 500. In the same way, if the stock’s beta is greater than 1 then it is more volatile compared to the market. Conversely, a beta below 1 signifies less volatility.
Now, if a portfolio’s beta is 3, it is three times more volatile than the market. Hence, if the market is projected to give 20% return, the portfolio will then definitely contribute 60% return which is amazing.
However, the opposite case also holds true. If the market slips 20% then the portfolio return plummets 60% which is surely a matter of concern.
The Winning Strategy
In our screening criteria we included beta in the range of 0 to 0.6 for short listing low risk stocks. But this can’t be the only criterion for betting on stocks. The other parameters that need to be added to create a winning portfolio are:
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 15 stocks that qualified the screening:
Headquartered in AR, Tyson Foods, Inc. (NYSE:(TSN - Free Report) – Free Report) was founded in 1935. It is the biggest U.S. chicken company and produces, distributes and markets chicken, beef, pork as well as prepared foods. The company is expected to report year-over-year earnings growth of 18.2% for fiscal 2017. Also, the Zacks Consensus Estimate for fourth-quarter fiscal 2017 has been revised upward over the last 30 days.
Based in Paramus, NJ, Movado Group, Inc. (NYSE:(MOV - Free Report) – Free Report) is a leading distributer of fine watches all over the world. The company posted an average positive earnings surprise of 2.54% for the last four quarters. Also, we are expecting Movado Group to witness year-over-year earnings growth of 2% for fiscal 2018.
Headquartered in Salt Lake City, UT, Myriad Genetics, Inc. (Nasdaq:(MYGN - Free Report) – Free Report) employs a number of proprietary technologies to target the genetic basis of human diseases. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters, with an average positive earnings surprise of 6.17%.
PRA Health Sciences, Inc. (Nasdaq: – Free Report) headquartered in Raleigh, NC, is the leading provider of outsourced services related to clinical developments. The company surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters with an average positive surprise of 6.10%. PRA Health is projected to report year-over-year earnings growth of 26.3% for 2017.
Based in Greenwich, CT, Urstadt Biddle Properties Inc. (NYSE: – Free Report) is the leading investor in the U.S. real estate market. The firm surpassed the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 6.03%. Moreover, for fiscal 2017, Urstadt Biddle will likely post year-over-year earnings growth of 123.2%.
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/performance for 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: Tyson Foods, Movado Group, Myriad Genetics, PRA Health Sciences and Urstadt Biddle Properties
For Immediate Release
Chicago, IL – October 19, 2017 - Stocks in this week’s article include Tyson Foods, Inc. (NYSE:(TSN - Free Report) – Free Report), Movado Group, Inc. (NYSE:(MOV - Free Report) – Free Report), Myriad Genetics, Inc. (Nasdaq:(MYGN - Free Report) – Free Report), PRA Health Sciences, Inc. (Nasdaq: – Free Report) and Urstadt Biddle Properties Inc. (NYSE: – Free Report).
Screen of the Week of Zacks Investment Research:
Buy 5 Low-Beta Stocks, Forget Market Volatility
For generating handsome returns, one has to invest in risky stocks. This seems to be a thumb rule for most investors. The strategy works extremely well for securities or portfolios that are directly correlated with the market. But the converse scenario should also be taken into account.
With extensive research we have come up with a strategy that proves lucrative returns could also be generated from less risky stocks.
Meaning of Beta
Beta indicates the volatility of a particular stock with respect to the market. In other words, beta measures the extent of stock price movement relative to the market (we are considering S&P 500 here).
If a company has a beta of 1, it means that the relative volatility of the stock is the same as that of the S&P 500. In the same way, if the stock’s beta is greater than 1 then it is more volatile compared to the market. Conversely, a beta below 1 signifies less volatility.
Now, if a portfolio’s beta is 3, it is three times more volatile than the market. Hence, if the market is projected to give 20% return, the portfolio will then definitely contribute 60% return which is amazing.
However, the opposite case also holds true. If the market slips 20% then the portfolio return plummets 60% which is surely a matter of concern.
The Winning Strategy
In our screening criteria we included beta in the range of 0 to 0.6 for short listing low risk stocks. But this can’t be the only criterion for betting on stocks. The other parameters that need to be added to create a winning portfolio are:
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 15 stocks that qualified the screening:
Headquartered in AR, Tyson Foods, Inc. (NYSE:(TSN - Free Report) – Free Report) was founded in 1935. It is the biggest U.S. chicken company and produces, distributes and markets chicken, beef, pork as well as prepared foods. The company is expected to report year-over-year earnings growth of 18.2% for fiscal 2017. Also, the Zacks Consensus Estimate for fourth-quarter fiscal 2017 has been revised upward over the last 30 days.
Based in Paramus, NJ, Movado Group, Inc. (NYSE:(MOV - Free Report) – Free Report) is a leading distributer of fine watches all over the world. The company posted an average positive earnings surprise of 2.54% for the last four quarters. Also, we are expecting Movado Group to witness year-over-year earnings growth of 2% for fiscal 2018.
Headquartered in Salt Lake City, UT, Myriad Genetics, Inc. (Nasdaq:(MYGN - Free Report) – Free Report) employs a number of proprietary technologies to target the genetic basis of human diseases. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters, with an average positive earnings surprise of 6.17%.
PRA Health Sciences, Inc. (Nasdaq: – Free Report) headquartered in Raleigh, NC, is the leading provider of outsourced services related to clinical developments. The company surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters with an average positive surprise of 6.10%. PRA Health is projected to report year-over-year earnings growth of 26.3% for 2017.
Based in Greenwich, CT, Urstadt Biddle Properties Inc. (NYSE: – Free Report) is the leading investor in the U.S. real estate market. The firm surpassed the Zacks Consensus Estimate in three of the last four quarters with an average positive earnings surprise of 6.03%. Moreover, for fiscal 2017, Urstadt Biddle will likely post year-over-year earnings growth of 123.2%.
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/performance for information about the performance numbers displayed in this press release.