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Navigate Market Volatility With These 5 Low-Beta Stocks
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With the outcome of U.S. presidential election remaining uncertain and coronavirus cases rising across the country, the stock market is headed for a bumpy ride ahead.
Hence, to navigate the volatility, it is of utmost importance to include low-beta stocks in one’s portfolio, as such securities not only deliver handsome returns but also provide shield against market volatility.
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.
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. 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 six stocks that qualified the screening:
Headquartered in Toronto, Canada, Barrick Gold Corporation (GOLD - Free Report) is a leading gold mining player, with several key exploration and production projects. Notably, the company has seen upward earnings estimate revisions for 2020 and 2021, respectively, in the past 30 days.
Headquartered in Greenwood Village, CO, Newmont Corporation (NEM - Free Report) is a leading explorer and producer of gold, copper, lead, zinc, and silver. In 2020 and 2021, the stock is likely to see earnings growth of 101.5% and 79.1%, respectively.
NIC Inc. , based in Olathe, KS, primarily provides user-friendly digital services that helps it serve many federal, state and local government agencies. In 2020, the stock is likely to see earnings growth of almost 35%.
Portland General Electric Company (POR - Free Report) , headquartered in Portland, OR, is a leading integrated electric utility. In the past 30 days, the stock has seen upward earnings estimate revisions for 2020.
Pampa Energía SA (PAM - Free Report) , based in Buenos Aires, Argentina, is involved in generating electricity as well as distributing the same. Although there have been no revisions for the company’s 2020 earnings estimates in the past 60 days, the consensus estimate for 2021 earnings has been revised higher over the same time frame.
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
Navigate Market Volatility With These 5 Low-Beta Stocks
With the outcome of U.S. presidential election remaining uncertain and coronavirus cases rising across the country, the stock market is headed for a bumpy ride ahead.
Hence, to navigate the volatility, it is of utmost importance to include low-beta stocks in one’s portfolio, as such securities not only deliver handsome returns but also provide shield against market volatility.
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.
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. 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 six stocks that qualified the screening:
Headquartered in Toronto, Canada, Barrick Gold Corporation (GOLD - Free Report) is a leading gold mining player, with several key exploration and production projects. Notably, the company has seen upward earnings estimate revisions for 2020 and 2021, respectively, in the past 30 days.
Headquartered in Greenwood Village, CO, Newmont Corporation (NEM - Free Report) is a leading explorer and producer of gold, copper, lead, zinc, and silver. In 2020 and 2021, the stock is likely to see earnings growth of 101.5% and 79.1%, respectively.
NIC Inc. , based in Olathe, KS, primarily provides user-friendly digital services that helps it serve many federal, state and local government agencies. In 2020, the stock is likely to see earnings growth of almost 35%.
Portland General Electric Company (POR - Free Report) , headquartered in Portland, OR, is a leading integrated electric utility. In the past 30 days, the stock has seen upward earnings estimate revisions for 2020.
Pampa Energía SA (PAM - Free Report) , based in Buenos Aires, Argentina, is involved in generating electricity as well as distributing the same. Although there have been no revisions for the company’s 2020 earnings estimates in the past 60 days, the consensus estimate for 2021 earnings has been revised higher over the same time frame.
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.