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Bet on 5 Low-Beta Stocks, Don't Panic About Market Volatility
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In-depth research and a thorough understanding of the capital market holds the key to success when it comes to the field of investment. Simply following the crowd and investing in stocks will not always generate healthy returns. Only a bull market will favor the strategy but a bearish market could take returns from risky assets to a rock bottom.
We have framed a strategy that clearly shows that investors could earn healthy returns from less risky stocks also.
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 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.
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 13 stocks that qualified the screening:
Headquartered in Manhattan Beach, CA, SKECHERS USA, Inc. (SKX - Free Report) is the manufacturer and distributer of varieties of lifestyle footwear. Over the last 30 days, the 2017 Zacks Consensus Estimate for earnings has been revised upward. Also, we are expecting the company to report year-over-year earnings growth of 7.4% for 2017.
The Boston Beer Company, Inc. (SAM - Free Report) , based in Boston, MA, is among the leading craft brewers in the domestic market. The company managed to surpass the Zacks Consensus Estimate in each of the last four quarters, with an average positive earnings surprise of 63.35%. Moreover, for the full year, the Zacks Consensus Estimate for earnings has been revised upward over the last 30 days.
Headquartered in Greeley, CO, Pilgrim's Pride Corporation (PPC - Free Report) is the leading distributor of its own processed chicken products. The company will likely witness year-over-year earnings growth of 52% in 2017. Also, over the prior 30 days, the 2017 Zacks Consensus Estimate for earnings has been revised upward.
Broomfield, CO based Vail Resorts, Inc. (MTN - Free Report) primarily involves in operating mountain resorts. The company managed to beat the Zacks Consensus Estimate in two of the last four quarters with an average positive earnings surprise of 4.49%. On top of that, for fiscal year 2018, Vail Resorts will likely report year-over-year earnings growth of 18.77%.
Headquartered in Tokyo, Canon Inc. is a leading manufacturer of camera. The company posted an average earnings surprise of 17.90% for the prior four quarters. Also, for 2017, Canon is expected to come up with year-over-year earnings growth of 15.6%.
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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Bet on 5 Low-Beta Stocks, Don't Panic About Market Volatility
In-depth research and a thorough understanding of the capital market holds the key to success when it comes to the field of investment. Simply following the crowd and investing in stocks will not always generate healthy returns. Only a bull market will favor the strategy but a bearish market could take returns from risky assets to a rock bottom.
We have framed a strategy that clearly shows that investors could earn healthy returns from less risky stocks also.
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 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.
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 13 stocks that qualified the screening:
Headquartered in Manhattan Beach, CA, SKECHERS USA, Inc. (SKX - Free Report) is the manufacturer and distributer of varieties of lifestyle footwear. Over the last 30 days, the 2017 Zacks Consensus Estimate for earnings has been revised upward. Also, we are expecting the company to report year-over-year earnings growth of 7.4% for 2017.
The Boston Beer Company, Inc. (SAM - Free Report) , based in Boston, MA, is among the leading craft brewers in the domestic market. The company managed to surpass the Zacks Consensus Estimate in each of the last four quarters, with an average positive earnings surprise of 63.35%. Moreover, for the full year, the Zacks Consensus Estimate for earnings has been revised upward over the last 30 days.
Headquartered in Greeley, CO, Pilgrim's Pride Corporation (PPC - Free Report) is the leading distributor of its own processed chicken products. The company will likely witness year-over-year earnings growth of 52% in 2017. Also, over the prior 30 days, the 2017 Zacks Consensus Estimate for earnings has been revised upward.
Broomfield, CO based Vail Resorts, Inc. (MTN - Free Report) primarily involves in operating mountain resorts. The company managed to beat the Zacks Consensus Estimate in two of the last four quarters with an average positive earnings surprise of 4.49%. On top of that, for fiscal year 2018, Vail Resorts will likely report year-over-year earnings growth of 18.77%.
Headquartered in Tokyo, Canon Inc. is a leading manufacturer of camera. The company posted an average earnings surprise of 17.90% for the prior four quarters. Also, for 2017, Canon is expected to come up with year-over-year earnings growth of 15.6%.
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 »