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Sail Through the Choppy Market With These 3 Low-Beta Stocks
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The Omicron variant of coronavirus is rapidly spreading worldwide, thereby injecting fresh volatility into markets. Many investors are revising their expectations for the economy downward since the near to medium-term outlook for global fuel demand is getting gloomy.
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 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 0.7 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 three stocks that qualified the screening:
Amphastar Pharmaceuticals, Inc. (AMPH - Free Report) is engaged primarily in developing generic and proprietary inhalation, intranasal and injectable products. The Zacks Consensus Estimate for Amphastar Pharmaceuticals’ earnings per share for 2021 and 2022 has been revised upward over the past 60 days.
Amphastar Pharmaceuticals’ stock has gained 22.8% in the past year, comparing favorably with a decline of 20.3% of the composite stocks belonging to the industry. Amphastar Pharmaceuticals believes that the strength in Primatene Mist, glucagon and epinephrine products have been driving its bottom line.
Sanderson Farms Inc is a leading producer and distributor of fresh, frozen and minimally prepared chicken. While returning above-average returns than the industry, Sanderson Farms has been generating robust internal growth.
Sanderson Farms is better positioned to combat industry downturns, banking on a strong balance sheet. Sanderson Farms’ stock has gained 36.5% in the past year, outpacing the rise of 7.3% of the composite stocks belonging to the industry
Sensus Healthcare, Inc. (SRTS - Free Report) is a leading manufacturer of superficial radiation therapy devices. The Zacks Consensus Estimate for Sensus Healthcare’s bottom line for 2021 and 2022 has been revised upward over the past 60 days.
Sensus Healthcare’s stock has surged 85.2% over the past year, outpacing the improvement of 4.5% of the composite stocks belonging to the industry.
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
Sail Through the Choppy Market With These 3 Low-Beta Stocks
The Omicron variant of coronavirus is rapidly spreading worldwide, thereby injecting fresh volatility into markets. Many investors are revising their expectations for the economy downward since the near to medium-term outlook for global fuel demand is getting gloomy.
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 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 0.7 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 three stocks that qualified the screening:
Amphastar Pharmaceuticals, Inc. (AMPH - Free Report) is engaged primarily in developing generic and proprietary inhalation, intranasal and injectable products. The Zacks Consensus Estimate for Amphastar Pharmaceuticals’ earnings per share for 2021 and 2022 has been revised upward over the past 60 days.
Amphastar Pharmaceuticals’ stock has gained 22.8% in the past year, comparing favorably with a decline of 20.3% of the composite stocks belonging to the industry. Amphastar Pharmaceuticals believes that the strength in Primatene Mist, glucagon and epinephrine products have been driving its bottom line.
Sanderson Farms Inc is a leading producer and distributor of fresh, frozen and minimally prepared chicken. While returning above-average returns than the industry, Sanderson Farms has been generating robust internal growth.
Sanderson Farms is better positioned to combat industry downturns, banking on a strong balance sheet. Sanderson Farms’ stock has gained 36.5% in the past year, outpacing the rise of 7.3% of the composite stocks belonging to the industry
Sensus Healthcare, Inc. (SRTS - Free Report) is a leading manufacturer of superficial radiation therapy devices. The Zacks Consensus Estimate for Sensus Healthcare’s bottom line for 2021 and 2022 has been revised upward over the past 60 days.
Sensus Healthcare’s stock has surged 85.2% over the past year, outpacing the improvement of 4.5% of the composite stocks belonging to the industry.
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.