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Buy These 5 Low-Beta Stocks & Combat the Choppy Market
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The outlook for the domestic economy is pretty upbeat on a flurry of encouraging developments. President Joe Biden has outlined a plan to widen the eligibility criteria of coronavirus vaccinations for all adults by May 1. This will likely bring the country very close to normalcy by the Independence Day weekend, Biden added. Notably, the news that Biden has signed the stimulus bill of $1.9 trillion into law has added to the optimism.
However, the country is still witnessing the rampant spread of coronavirus and with the virus mutating, the market has become volatile.
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 choppy market conditions.
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 seven stocks that qualified the screening:
Based in Southport, CT, Sturm, Ruger & Company, Inc. (RGR - Free Report) is a leading manufacturer and seller of firearms. For 2021, the stock has witnessed upward earnings estimate revisions over the past 30 days.
Based in Nelsonville, OH, Rocky Brands, Inc. (RCKY - Free Report) is primarily engaged in designing and marketing finest footwear. In the past 30 days, the stock has witnessed upward earnings estimate revisions for 2021.
Owens & Minor, Inc. (OMI - Free Report) , headquartered in Richmond, VA, primarily operates as a healthcare services company. In 2021, the stock is likely to see earnings growth of 45.6%.
For treating patients suffering from central nervous and sensory system disorders, Natus Medical Incorporated , headquartered in Pleasanton, CA, is involved primarily in providing medical device solutions. In 2021, the stock is likely to see earnings growth of 203%.
Penumbra, Inc. (PEN - Free Report) , headquartered in Alameda, CA, is a leading manufacturer of medical devices in the United States. The stock has witnessed upward earnings estimate revisions for 2021 over 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.
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: Shutterstock
Buy These 5 Low-Beta Stocks & Combat the Choppy Market
The outlook for the domestic economy is pretty upbeat on a flurry of encouraging developments. President Joe Biden has outlined a plan to widen the eligibility criteria of coronavirus vaccinations for all adults by May 1. This will likely bring the country very close to normalcy by the Independence Day weekend, Biden added. Notably, the news that Biden has signed the stimulus bill of $1.9 trillion into law has added to the optimism.
However, the country is still witnessing the rampant spread of coronavirus and with the virus mutating, the market has become volatile.
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 choppy market conditions.
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 seven stocks that qualified the screening:
Based in Southport, CT, Sturm, Ruger & Company, Inc. (RGR - Free Report) is a leading manufacturer and seller of firearms. For 2021, the stock has witnessed upward earnings estimate revisions over the past 30 days.
Based in Nelsonville, OH, Rocky Brands, Inc. (RCKY - Free Report) is primarily engaged in designing and marketing finest footwear. In the past 30 days, the stock has witnessed upward earnings estimate revisions for 2021.
Owens & Minor, Inc. (OMI - Free Report) , headquartered in Richmond, VA, primarily operates as a healthcare services company. In 2021, the stock is likely to see earnings growth of 45.6%.
For treating patients suffering from central nervous and sensory system disorders, Natus Medical Incorporated , headquartered in Pleasanton, CA, is involved primarily in providing medical device solutions. In 2021, the stock is likely to see earnings growth of 203%.
Penumbra, Inc. (PEN - Free Report) , headquartered in Alameda, CA, is a leading manufacturer of medical devices in the United States. The stock has witnessed upward earnings estimate revisions for 2021 over 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.
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.