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Bet on These 4 Low-Beta Stocks to Combat Market Volatility
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Over the past three weeks, the stock market has rallied following the approvals from the Federal Reserve to raise interest rates for the first time in more than three years. The rate hike pleased investors since the measure will curb inflation. However, Russia’s violent and unprovoked invasion of Ukraine has caused uncertainty.
Thus, the U.S. market will possibly be choppy in the near term. Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against volatile market conditions.
Beta Understanding
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 stocks among six that qualified the screening:
Meridian Bioscience, Inc. , headquartered in Cincinnati, OH, primarily manufactures diagnostic test kits for gastrointestinal and respiratory infectious diseases.
For fiscal 2022 earnings per share (EPS), Meridian Bioscience has witnessed upward estimate revisions over the past 60 days. Year to date, Meridian Bioscience has gained 28.9% versus the industry’s 9.2% decline.
Headquartered in Burlingame, CA, Innoviva, Inc. (INVA - Free Report) receives royalties under the Long-Acting Beta2 Agonist (LABA) collaboration agreement on sales of once-daily products for treating asthma.
For 2022 EPS, Innoviva has witnessed upward estimate revisions over the past 60 days. Year to date, Innoviva has gained 13.7% compared with the industry’s 3.7% rally.
OP Bancorp (OPBK - Free Report) has a solid business model and serves the banking needs of professionals and businesses with small and medium-sized operations.
In 2022 and 2023, OP Bancorp is likely to see earnings growth of 18.1% and 3.6%, respectively. Year to date, OP Bancorp has gained 11.4% compared with the industry’s 5.3% rally.
United Fire Group Inc. (UFCS - Free Report) is a well-known name in writing property and casualty insurance. United Fire Group has a strong consolidated balance sheet.
Apart from that, United Fire Group is focused on returning capital to shareholders. Since March 1968, United Fire Group has paid quarterly dividends in every quarter.
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: Bigstock
Bet on These 4 Low-Beta Stocks to Combat Market Volatility
Over the past three weeks, the stock market has rallied following the approvals from the Federal Reserve to raise interest rates for the first time in more than three years. The rate hike pleased investors since the measure will curb inflation. However, Russia’s violent and unprovoked invasion of Ukraine has caused uncertainty.
Thus, the U.S. market will possibly be choppy in the near term. Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against volatile market conditions.
Beta Understanding
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 stocks among six that qualified the screening:
Meridian Bioscience, Inc. , headquartered in Cincinnati, OH, primarily manufactures diagnostic test kits for gastrointestinal and respiratory infectious diseases.
For fiscal 2022 earnings per share (EPS), Meridian Bioscience has witnessed upward estimate revisions over the past 60 days. Year to date, Meridian Bioscience has gained 28.9% versus the industry’s 9.2% decline.
Headquartered in Burlingame, CA, Innoviva, Inc. (INVA - Free Report) receives royalties under the Long-Acting Beta2 Agonist (LABA) collaboration agreement on sales of once-daily products for treating asthma.
For 2022 EPS, Innoviva has witnessed upward estimate revisions over the past 60 days. Year to date, Innoviva has gained 13.7% compared with the industry’s 3.7% rally.
OP Bancorp (OPBK - Free Report) has a solid business model and serves the banking needs of professionals and businesses with small and medium-sized operations.
In 2022 and 2023, OP Bancorp is likely to see earnings growth of 18.1% and 3.6%, respectively. Year to date, OP Bancorp has gained 11.4% compared with the industry’s 5.3% rally.
United Fire Group Inc. (UFCS - Free Report) is a well-known name in writing property and casualty insurance. United Fire Group has a strong consolidated balance sheet.
Apart from that, United Fire Group is focused on returning capital to shareholders. Since March 1968, United Fire Group has paid quarterly dividends in every quarter.
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.