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Fretting Over Market Volatility? Bet on These 4 Low-Beta Stocks

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Although coronavirus vaccines are rolling out at a massive scale, there are some factors that create uncertainty and could make the market volatile. The rapidly spreading Omicron variant of COVID-19 could curtail several businesses and activities. Investors are also worried that inflation in the United States may hurt corporate earnings.

Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against choppy market conditions.

Meaning of Beta

Beta measures the volatility or risk of a particular asset compared 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 four of nine stocks that qualified the screening:

AMN Healthcare Services Inc. (AMN - Free Report) is a leading provider of staffing services to hospitals and healthcare facilities. AMN Healthcare has witnessed upward earnings estimate revisions for 2022 over the past 60 days.

With the most diverse staffing and workforce technology solutions, AMN Healthcare is well placed to generate huge cashflows for years since the United States has been trying to cope with a severe shortage of healthcare professionals.

Headquartered in Anoka, MN, Vista Outdoor Inc. (VSTO - Free Report) is a leading consumer product manufacturer that targets recreation and sports markets. The Zacks Consensus Estimate for Vista Outdoor’s earnings per share for fiscal 2022 and 2023 has been revised upward over the past 60 days.

Vista Outdoor’s stock has surged 90.4% over the past year, comparing favorably with a decline of 37.7% of the composite stocks belonging to the industry. VSTO has a strong focus on returning capital to shareholders. Since the inception of the $100-million share buyback plan, 1,523,683 shares have been bought back by VSTO for a total consideration of $56 million.

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 2022 has been revised upward over the past 60 days.

Sensus Healthcare’s stock has surged 87.1% over the past year, outpacing the improvement of 12% of the composite stocks belonging to the industry.

Ameresco, Inc. (AMRC - Free Report) is well-positioned to generate strong cashflows from its business line – Smart Energy Solutions. Through this business line, Ameresco is enacting comprehensive energy efficiency solutions.

Ameresco’s asset base includes 319 megawatt electrical (Mwe) of renewable energy projects along with more than $800 million in renewable power projects. Ameresco has an ambitious mission to provide energy-efficient and renewable solutions for a low carbon future.

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.