Markets are extremely volatile as the large but opposing forces of advancement in coronavirus vaccine studies and the new wave of coronavirus infections keep investors on the edge. Hence, it is important to create a portfolio of low-beta securities since such stocks not only deliver healthy returns but also provide a shield against market volatility.
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.
We have taken
beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. However, this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters as well 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 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are five of the 10 stocks that qualified the screening:
Domino's Pizza, Inc. ( DPZ Quick Quote DPZ - Free Report) is a well-known pizza delivery company, with operations spreading across the world. The company – headquartered in Ann Arbor, MI – is likely to see earnings growth of 31% in 2020. RLI Corp. (RLI) is involved in underwriting property and casualty insurance. The company has witnessed upward earnings estimate revisions for 2020 in the past 30 days.
Based in Reno, NV,
Employers Holdings, Inc. ( EIG Quick Quote EIG - Free Report) primarily involved in the commercial property and casualty insurance industry. The company has seen upward earnings estimate revisions for 2020 in the past 30 days. Graco Inc. ( GGG Quick Quote GGG - Free Report) is touted as one of the leading manufacturers of fluid handling equipment. The company – headquartered in Minneapolis, MN – has seen upward earnings estimate revisions for 2020 in the past 30 days. Coca-Cola European Partners plc ( CCEP Quick Quote CCEP - Free Report) is a leading distributor of non-alcoholic ready-to-drink beverages. The company – based in Uxbridge, the United Kingdom – has seen upward earnings estimate revisions for 2020 in the past 30 days.
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.
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. 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 .