Along with keeping a close eye on economic recovery, investors are analyzing signs of inflations and gauging its possible effects on the Federal Reserve’s monetary policy. This is making the stock market volatile.
Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will not only deliver healthy returns but also provide a shield against choppy market conditions.
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 stocks that qualified the screening:
J & J Snack Foods Corp. ( JJSF Quick Quote JJSF - Free Report) is a leading distributer and manufacturer of nutritional snacks and beverages. For fiscal year 2021, the stock is likely to see earnings growth of 113.5%.
Based in Southport, CT,
Sturm, Ruger & Company, Inc. ( RGR Quick Quote 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.
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 2022 and 2023 over the past 30 days. Canon Inc. ( CAJ Quick Quote CAJ - Free Report) is a leading seller of office multifunction devices, laser and inkjet printers and lithography equipment. Over the past seven days, the stock has witnessed upward earnings estimate revisions for 2021 and 2022, respectively. EuroDry Ltd. ( EDRY Quick Quote EDRY - Free Report) is a leading operator of drybulk carriers. Over the past 30 days, the stock has witnessed upward earnings estimate revisions for 2021.
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 .