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Counter Market Volatility With These 5 Low-Beta Stocks
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To earn high returns, one has to gamble — this is a common belief in the investment world. However, this works well only when the market is bullish.
This article presents a strategy that shows low-beta stocks or low-risky securities can also prove rewarding when a few other parameters are considered.
Meaning of Beta
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.
Screening Criteria:
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 stocks that qualified the screening:
Based in Haifa Bay, Israel-based Taro Pharmaceutical Industries Ltd (TARO - Free Report) is a leading pharmaceutical firm, providing premium healthcare products. The company posted an average positive earnings surprise for the last four quarters, the average positive earnings surprise being 5.5%. For the year ended Mar 31, 2019, the company is expected report earnings growth of almost 29%.
Headquartered in London, the United Kingdom,Anglo American plc (NGLOY - Free Report) is primarily involved in exploring metals in the global market. Through 2019, the stock is likely to see earnings growth of 5%.
eGain (EGAN - Free Report) ,headquartered in Sunnyvale, CA, is a provider of a unified cloud software solution for automating customer engagement. For fiscal 2019 and 2020, the stock is likely to see earnings growth of 216.7% and 21.1%, respectively.
Headquartered in Naju, South Korea,Korea Electric Power Corporation (KEP - Free Report) is a leadingelectric utility firm. The company is expected to post earnings growth of 170.6% through 2019.
Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC - Free Report) , headquartered in Guadalajara, Mexico, is involved in operating airports. Through 2019 and 2020, the stock is likely to post earnings growth of 4.2% and 11.9%, respectively.
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.
Image: Bigstock
Counter Market Volatility With These 5 Low-Beta Stocks
To earn high returns, one has to gamble — this is a common belief in the investment world. However, this works well only when the market is bullish.
This article presents a strategy that shows low-beta stocks or low-risky securities can also prove rewarding when a few other parameters are considered.
Meaning of Beta
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.
Screening Criteria:
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 stocks that qualified the screening:
Based in Haifa Bay, Israel-based Taro Pharmaceutical Industries Ltd (TARO - Free Report) is a leading pharmaceutical firm, providing premium healthcare products. The company posted an average positive earnings surprise for the last four quarters, the average positive earnings surprise being 5.5%. For the year ended Mar 31, 2019, the company is expected report earnings growth of almost 29%.
Headquartered in London, the United Kingdom,Anglo American plc (NGLOY - Free Report) is primarily involved in exploring metals in the global market. Through 2019, the stock is likely to see earnings growth of 5%.
eGain (EGAN - Free Report) ,headquartered in Sunnyvale, CA, is a provider of a unified cloud software solution for automating customer engagement. For fiscal 2019 and 2020, the stock is likely to see earnings growth of 216.7% and 21.1%, respectively.
Headquartered in Naju, South Korea,Korea Electric Power Corporation (KEP - Free Report) is a leadingelectric utility firm. The company is expected to post earnings growth of 170.6% through 2019.
Grupo Aeroportuario del Pacífico, S.A.B. de C.V. (PAC - Free Report) , headquartered in Guadalajara, Mexico, is involved in operating airports. Through 2019 and 2020, the stock is likely to post earnings growth of 4.2% and 11.9%, respectively.
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.