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4 Compelling Low-Beta Tech Stocks in the Market Right Now
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Currently, stock markets are flying high, courtesy of a favorable GDP growth rate, rising disposable income, an improving labor market with unemployment rate at a 16-year low, rise in economic activity post hurricanes and a low inflation rate. All these have considerably boosted consumer sentiment, which hit a 17-year high in November.
Since the market is on an upward trajectory, investing in risky stocks will yield huge returns. However, one cannot ignore the various micro and macro factors that can lead to volatility when they come into play.
Uncertainties That May Loom Large
Market expectations for tax reform have increased as the GOP tax bill passed the Senate Budget Committee on a party-line vote. Though chances of the bill being passed by the full Senate have increased considerably, a failure in this regard could make the S&P 500 slip.
Again, the Fed has started reducing its balance. It’s worth noting that this event has had an adverse impact in the past. KM Partners data shows that five out of six times the Fed has made efforts to reduce its balance sheet, it has resulted in a recession. So, this sentiment can lead to market volatility going forward especially if the Fed takes up a hawkish approach. As of now, the Fed is taking it easy and therefore chances of market disruption are low.
Further, heightened tensions between the United States and North Korea can also cause stocks to fall. Though a full-fledged war is unlikely, investors will surely prefer to move out of high risk stocks.
Invest in Low-Beta Stocks
In this scenario, it will be wise to add some safe bets to your portfolio. Such a portfolio can be easily created based on the low beta strategy, which selects stocks less prone to risks than the market.
Beta, also known as the beta coefficient, measures the volatility of a stock against broader markets. It measures the extent to which a stock’s return may be affected or its price fluctuates owing to market conditions. Stocks with a beta ranging from 0 to 1 mainly show less volatility than the broader markets.
So, investors can neutralize losses with low correlation stocks as they are less prone to day-to-day fluctuations.
Our Choices from the Tech Sector
Here, we have handpicked four low-beta stocks from the technology sector with a beta of less than 1, carrying a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of A or B.
Ohta-ku, Tokyo based Canon Inc. sports a Zacks Rank #1 (Strong Buy) and has a beta of 0.45 and a VGM Score of B.
Canon, an industry leader in professional and consumer imaging equipment and information systems, has witnessed 15.2% increase in the Zacks Consensus Estimate for earnings for full-year 2017 over the last 60 days. Adding further to its inherent strength, the company has delivered an average positive surprise of 17.9% over the past four quarters. Its earnings are projected to improve 65.6% year over year.
Investors can also count on Five9, Inc. (FIVN - Free Report) with beta as low as 0.32. The company came up with an average trailing four-quarter earnings surprise of 200%. The Zacks Consensus Estimate for earnings for full-year 2017 has increased more than 100% over the last 60 days, instilling confidence among investors. This San Ramon, CA based provider of cloud software for data centers can be a good fit, backed by its Zacks Rank #2 and a VGM Score of B. Its earnings are projected to increase a massive 210.2% year over year.
To satiate investor appetite further, we suggest investing in Cohu, Inc. (COHU - Free Report) . Headquartered in Poway, CA, this Zacks Rank #2 company is a leading supplier of semiconductor test and inspection handlers, micro-electro mechanical system (MEMS) test modules, test contactors and thermal sub-systems worldwide. The company boasts of a solid earnings surprise history, beating estimates in each of the last four quarters with an average positive surprise of 63.1%. It also has exhibited favorable estimate revisions trend for 2017 over the past 60 days. Further, its projected EPS growth of 131.9% underscores its solid prospects. If this doesn’t appear enough, one can take a look at its VGM Score of A and beta of 0.89.
Another company that warrants a look is Nova Measuring Instruments Ltd. (NVMI - Free Report) , with beta of 0.91. This Ness Ziona, Israel based company carries a Zacks Rank #2 and has a VGM Score of A. The stock delivered an average four-quarter earnings surprise of 19.31%. Further, fiscal 2017 estimates for Nova Measuring have moved up over the past 60 days. Moreover, its projected EPS growth rate of 34.2% makes it a solid bet.
Nova Measuring Instruments Ltd. Price and Consensus
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
4 Compelling Low-Beta Tech Stocks in the Market Right Now
Currently, stock markets are flying high, courtesy of a favorable GDP growth rate, rising disposable income, an improving labor market with unemployment rate at a 16-year low, rise in economic activity post hurricanes and a low inflation rate. All these have considerably boosted consumer sentiment, which hit a 17-year high in November.
Since the market is on an upward trajectory, investing in risky stocks will yield huge returns. However, one cannot ignore the various micro and macro factors that can lead to volatility when they come into play.
Uncertainties That May Loom Large
Market expectations for tax reform have increased as the GOP tax bill passed the Senate Budget Committee on a party-line vote. Though chances of the bill being passed by the full Senate have increased considerably, a failure in this regard could make the S&P 500 slip.
Again, the Fed has started reducing its balance. It’s worth noting that this event has had an adverse impact in the past. KM Partners data shows that five out of six times the Fed has made efforts to reduce its balance sheet, it has resulted in a recession. So, this sentiment can lead to market volatility going forward especially if the Fed takes up a hawkish approach. As of now, the Fed is taking it easy and therefore chances of market disruption are low.
Further, heightened tensions between the United States and North Korea can also cause stocks to fall. Though a full-fledged war is unlikely, investors will surely prefer to move out of high risk stocks.
Invest in Low-Beta Stocks
In this scenario, it will be wise to add some safe bets to your portfolio. Such a portfolio can be easily created based on the low beta strategy, which selects stocks less prone to risks than the market.
Beta, also known as the beta coefficient, measures the volatility of a stock against broader markets. It measures the extent to which a stock’s return may be affected or its price fluctuates owing to market conditions. Stocks with a beta ranging from 0 to 1 mainly show less volatility than the broader markets.
So, investors can neutralize losses with low correlation stocks as they are less prone to day-to-day fluctuations.
Our Choices from the Tech Sector
Here, we have handpicked four low-beta stocks from the technology sector with a beta of less than 1, carrying a Zacks Rank #1 (Strong Buy) or #2 (Buy) and a VGM Score of A or B.
Ohta-ku, Tokyo based Canon Inc. sports a Zacks Rank #1 (Strong Buy) and has a beta of 0.45 and a VGM Score of B.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Canon, an industry leader in professional and consumer imaging equipment and information systems, has witnessed 15.2% increase in the Zacks Consensus Estimate for earnings for full-year 2017 over the last 60 days. Adding further to its inherent strength, the company has delivered an average positive surprise of 17.9% over the past four quarters. Its earnings are projected to improve 65.6% year over year.
Canon, Inc. Price and Consensus
Canon, Inc. Price and Consensus | Canon, Inc. Quote
Investors can also count on Five9, Inc. (FIVN - Free Report) with beta as low as 0.32. The company came up with an average trailing four-quarter earnings surprise of 200%. The Zacks Consensus Estimate for earnings for full-year 2017 has increased more than 100% over the last 60 days, instilling confidence among investors. This San Ramon, CA based provider of cloud software for data centers can be a good fit, backed by its Zacks Rank #2 and a VGM Score of B. Its earnings are projected to increase a massive 210.2% year over year.
Five9, Inc. Price and Consensus
Five9, Inc. Price and Consensus | Five9, Inc. Quote
To satiate investor appetite further, we suggest investing in Cohu, Inc. (COHU - Free Report) . Headquartered in Poway, CA, this Zacks Rank #2 company is a leading supplier of semiconductor test and inspection handlers, micro-electro mechanical system (MEMS) test modules, test contactors and thermal sub-systems worldwide. The company boasts of a solid earnings surprise history, beating estimates in each of the last four quarters with an average positive surprise of 63.1%. It also has exhibited favorable estimate revisions trend for 2017 over the past 60 days. Further, its projected EPS growth of 131.9% underscores its solid prospects. If this doesn’t appear enough, one can take a look at its VGM Score of A and beta of 0.89.
Cohu, Inc. Price and Consensus
Cohu, Inc. Price and Consensus | Cohu, Inc. Quote
Another company that warrants a look is Nova Measuring Instruments Ltd. (NVMI - Free Report) , with beta of 0.91. This Ness Ziona, Israel based company carries a Zacks Rank #2 and has a VGM Score of A. The stock delivered an average four-quarter earnings surprise of 19.31%. Further, fiscal 2017 estimates for Nova Measuring have moved up over the past 60 days. Moreover, its projected EPS growth rate of 34.2% makes it a solid bet.
Nova Measuring Instruments Ltd. Price and Consensus
Nova Measuring Instruments Ltd. Price and Consensus | Nova Measuring Instruments Ltd. Quote
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>