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Include 5 Low-Beta Stocks & Nullify Market Volatility
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Following the crowd will not take you anywhere when it comes to the investment field. People simply trail the thumb rule that only risky stocks generate lucrative returns. The strategy works well when market is bullish but the opposite scenario should also be taken into account.
After intense research we have developed a strategy which shows that handsome returns can also be generated from less risky stocks.
Beta Understanding
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 16 stocks that qualified the screening:
Headquartered in Manhattan Beach, CA, Skechers U.S.A., Inc. (SKX - Free Report) is a leading designer and distributor of men’s and women’s footwear.
We are expecting the company to witness year-over-year earnings growth of 8.6% and 26.1% for 2017 and 2018, respectively. Also, over the last 30 days, the Zacks Consensus Estimate of earnings for 2017 has been revised upward.
The Boston Beer Company, Inc. (SAM - Free Report) , based in Boston, MA, is the largest craft brewer in the United States. The firm has managed to surpass the Zacks Consensus Estimate of earnings in all the prior four quarters, with an average positive surprise of 63.4%.
On top of that, over the last 60 days, the Zacks Consensus Estimate of earnings for 2017 has been revised upward.
Headquartered in Greeley, CO, Pilgrim's Pride Corporation (PPC - Free Report) supplies ready-to-cook frozen chicken products. The company delivered an average positive earnings surprise of 1.5% for the last four quarters.
For 2017, Pilgrim's Pride’s earnings are expected to grow 62.7% year over year.
Movado Group, Inc. (MOV - Free Report) , based in Paramus, NJ, is the provider of fine watches in the global market. The company came up with an average positive earnings surprise of 0.7% for the last four quarters.
Also, for fiscal 2018, the company will likely report year-over-year earnings growth of 9.1%.
Headquartered in San Juan, Puerto Rico, Triple-S Management Corporation is a leading managed care firm. The company delivered an average positive earnings surprise of 73.9% for the prior four quarters. Also, we are expecting the firm to report year-over-year earnings growth of 846.2% for 2017.
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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Include 5 Low-Beta Stocks & Nullify Market Volatility
Following the crowd will not take you anywhere when it comes to the investment field. People simply trail the thumb rule that only risky stocks generate lucrative returns. The strategy works well when market is bullish but the opposite scenario should also be taken into account.
After intense research we have developed a strategy which shows that handsome returns can also be generated from less risky stocks.
Beta Understanding
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 16 stocks that qualified the screening:
Headquartered in Manhattan Beach, CA, Skechers U.S.A., Inc. (SKX - Free Report) is a leading designer and distributor of men’s and women’s footwear.
We are expecting the company to witness year-over-year earnings growth of 8.6% and 26.1% for 2017 and 2018, respectively. Also, over the last 30 days, the Zacks Consensus Estimate of earnings for 2017 has been revised upward.
The Boston Beer Company, Inc. (SAM - Free Report) , based in Boston, MA, is the largest craft brewer in the United States. The firm has managed to surpass the Zacks Consensus Estimate of earnings in all the prior four quarters, with an average positive surprise of 63.4%.
On top of that, over the last 60 days, the Zacks Consensus Estimate of earnings for 2017 has been revised upward.
Headquartered in Greeley, CO, Pilgrim's Pride Corporation (PPC - Free Report) supplies ready-to-cook frozen chicken products. The company delivered an average positive earnings surprise of 1.5% for the last four quarters.
For 2017, Pilgrim's Pride’s earnings are expected to grow 62.7% year over year.
Movado Group, Inc. (MOV - Free Report) , based in Paramus, NJ, is the provider of fine watches in the global market. The company came up with an average positive earnings surprise of 0.7% for the last four quarters.
Also, for fiscal 2018, the company will likely report year-over-year earnings growth of 9.1%.
Headquartered in San Juan, Puerto Rico, Triple-S Management Corporation is a leading managed care firm. The company delivered an average positive earnings surprise of 73.9% for the prior four quarters. Also, we are expecting the firm to report year-over-year earnings growth of 846.2% for 2017.
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 »