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Betting on These 5 Low-Beta Stocks is Ideal in a Choppy Market

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Many investors are quite optimistic that the stock market will continue to move higher, primarily backed by a strong earnings season, healthy economic data and central bank’s non-stop support. The positives are being offset by the rapidly-spreading delta variant of coronavirus that is stalling the recovery of economies across the world.

With the lingering uncertainties, the market is likely to be volatile as a whole. 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 the 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 eight stocks that qualified the screening:

Headquartered in Anoka, MN, Vista Outdoor Inc. (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 seven days.

Canon Inc. (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.

Apollo Medical Holdings, Inc. (AMEH - Free Report) is among the leading healthcare companies, being powered with modern technologies and provides physician-centric care. In 2021, the stock is likely to see earnings growth of 26.7%.

Tyler Technologies, Inc. (TYL - Free Report) is a leading provider of integrated software and technology services. The services are being primarily offered to the public sector. For 2021, the company is likely to see earnings growth of 22.1%.

ResMed (RMD - Free Report) is a leading provider of innovative solutions, treating people out of hospitals and guiding them to a healthier life. For fiscal 2022, the stock is likely to see earnings growth of almost 15%.

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.