Investors are weighing both, rolling out of coronavirus vaccines and rapidly rising infections, making the market extremely volatile. Despite the effective vaccines and optimism over increased spending by Democrats post-inauguration, there remain widespread uncertainties, at least for the foreseeable period.
Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities can not only deliver healthy returns but also provide a shield against the choppy market.
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 four stocks that qualified the screening:
Headquartered in Anoka, MN,
Vista Outdoor Inc. ( VSTO Quick Quote VSTO - Free Report) is a leading manufacturer of consumer products that target recreation and sports markets. The company has witnessed upward earnings estimate revisions for fiscal 2021 in the past 30 days. Meridian Bioscience, Inc. ( VIVO Quick Quote VIVO - Free Report) , headquartered in Cincinnati, OH, the company is primarily involved in manufacturing diagnostic test kits for the diagnosis of gastrointestinal and respiratory infectious diseases. For fiscal 2021, the stock has seen upward earnings estimate revisions in the past 30 days. Owens & Minor, Inc. ( OMI Quick Quote OMI - Free Report) , headquartered in Richmond, VA, the company primarily operates as a healthcare services company. In 2021, the stock is likely to see earnings growth of 16.5%. Lakeland Industries, Inc. ( LAKE Quick Quote LAKE - Free Report) is primarily involved in manufacturing protective garments to protect people from hazardous chemicals, fire and diseases. In fiscal 2021, the stock is likely to see earnings growth of 809%.
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.
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Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance .