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Combat the Choppy Market With These 5 Low-Beta Stocks
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The coronavirus vaccine rollout and the massive pandemic aid bill that was recently signed into law by President Donald Trump have been bolstering investor confidence in a strong economic rebound in 2021. However, the new variant of the virus that emerged in the U.K and has been confirmed in some other countries has been acting as a dampener to the path of the recovery, thereby making the stock market volatile.
Hence, it is of utmost importance to create a portfolio of low-beta securities as such stocks not only deliver healthy returns but also provide protection against market volatility.
Understanding 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. 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.
Here are five of the nine stocks that qualified the screening:
Headquartered in Anoka, MN, Vista Outdoor Inc. (VSTO - Free Report) is primarily involved in manufacturing consumer products for outdoor sports and recreational activities. For fiscal year 2021 and 2022, the stock has seen upward earnings estimate revisions over the past 60 days.
Headquartered in Burlingame, CA, Innoviva, Inc. (INVA - Free Report) receives royalties under the Long-Acting Beta2 Agonist (“LABA”) collaboration agreement on sales of once-daily products for treating asthma. The stock is likely to see earnings growth of 54% in 2020.
Owens & Minor, Inc. (OMI - Free Report) , headquartered in Richmond, VA, primarily operates as a healthcare services company. In 2020 and 2021, the stock is likely to see earnings growth of 246.4% and 11.8%, respectively.
Based in Olathe, KS, NIC Inc. collaborates with many federal, state and local government agencies and thereby guides governments to serve citizens and businesses through the deployment of technology. In 2020, the stock is likely to see earnings growth of 36%.
California Water Service Group (CWT - Free Report) , headquartered in San Jose, CA, is a leading provider of services related to water utility. In 2020, the stock is likely to see earnings growth of 35.1%.
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.
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Combat the Choppy Market With These 5 Low-Beta Stocks
The coronavirus vaccine rollout and the massive pandemic aid bill that was recently signed into law by President Donald Trump have been bolstering investor confidence in a strong economic rebound in 2021. However, the new variant of the virus that emerged in the U.K and has been confirmed in some other countries has been acting as a dampener to the path of the recovery, thereby making the stock market volatile.
Hence, it is of utmost importance to create a portfolio of low-beta securities as such stocks not only deliver healthy returns but also provide protection against market volatility.
Understanding 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. 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 (Strong Buy) stocks here.
Here are five of the nine stocks that qualified the screening:
Headquartered in Anoka, MN, Vista Outdoor Inc. (VSTO - Free Report) is primarily involved in manufacturing consumer products for outdoor sports and recreational activities. For fiscal year 2021 and 2022, the stock has seen upward earnings estimate revisions over the past 60 days.
Headquartered in Burlingame, CA, Innoviva, Inc. (INVA - Free Report) receives royalties under the Long-Acting Beta2 Agonist (“LABA”) collaboration agreement on sales of once-daily products for treating asthma. The stock is likely to see earnings growth of 54% in 2020.
Owens & Minor, Inc. (OMI - Free Report) , headquartered in Richmond, VA, primarily operates as a healthcare services company. In 2020 and 2021, the stock is likely to see earnings growth of 246.4% and 11.8%, respectively.
Based in Olathe, KS, NIC Inc. collaborates with many federal, state and local government agencies and thereby guides governments to serve citizens and businesses through the deployment of technology. In 2020, the stock is likely to see earnings growth of 36%.
California Water Service Group (CWT - Free Report) , headquartered in San Jose, CA, is a leading provider of services related to water utility. In 2020, the stock is likely to see earnings growth of 35.1%.
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.