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Stamp Out Choppy Market With These 4 Low-Beta Stocks
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Inflationary pressure will probably continue to make the market volatile. The Fed chairman Jerome Powell warns that the central bank should keep raising interest rates to combat inflation, raising fears of recession.
Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and shield against volatile market conditions. In this regard, stocks like Otter Tail Corporation (OTTR - Free Report) , Ardmore Shipping Corporation (ASC - Free Report) , Lancaster Colony Corporation (LANC - Free Report) and BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) are worth betting on.
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 a 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 a 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 0.5 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 13 that qualified the screening:
Otter Tail Corporation is a leading player in electric utility and manufacturing businesses. For 2022 and 2023, Otter Tail has witnessed upward earnings estimate revisions in the past 30 days. To secure more stable cashflows, Otter Tail is planning to invest in rate base growth opportunities.
Ardmore Shipping’s outlook seems bright since the company has set a core strategy of developing a modern, high-quality fleet of products and chemical tankers. Building up good commercial relationships for the long term is also a strong focus of Ardmore Shipping. In 2022, ASC will likely see an earnings growth of 318%.
Lancaster Colony is a well-known name in manufacturing and marketing specialty food products. To counter the inflationary pressure, Lancaster Colony resorted to continued pricing actions to boost net sales. LANC is benefitting from handsome demand for frozen garlic bread and frozen dinner rolls.
BJ's Wholesale Club is a leading player in offering a differentiated shopping experience. BJ's Wholesale Club is improving it’s merchandising and witnessing an increase in its member base in both size and quality.
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
Stamp Out Choppy Market With These 4 Low-Beta Stocks
Inflationary pressure will probably continue to make the market volatile. The Fed chairman Jerome Powell warns that the central bank should keep raising interest rates to combat inflation, raising fears of recession.
Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and shield against volatile market conditions. In this regard, stocks like Otter Tail Corporation (OTTR - Free Report) , Ardmore Shipping Corporation (ASC - Free Report) , Lancaster Colony Corporation (LANC - Free Report) and BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) are worth betting on.
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 a 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 a 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 0.5 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 13 that qualified the screening:
Otter Tail Corporation is a leading player in electric utility and manufacturing businesses. For 2022 and 2023, Otter Tail has witnessed upward earnings estimate revisions in the past 30 days. To secure more stable cashflows, Otter Tail is planning to invest in rate base growth opportunities.
Ardmore Shipping’s outlook seems bright since the company has set a core strategy of developing a modern, high-quality fleet of products and chemical tankers. Building up good commercial relationships for the long term is also a strong focus of Ardmore Shipping. In 2022, ASC will likely see an earnings growth of 318%.
Lancaster Colony is a well-known name in manufacturing and marketing specialty food products. To counter the inflationary pressure, Lancaster Colony resorted to continued pricing actions to boost net sales. LANC is benefitting from handsome demand for frozen garlic bread and frozen dinner rolls.
BJ's Wholesale Club is a leading player in offering a differentiated shopping experience. BJ's Wholesale Club is improving it’s merchandising and witnessing an increase in its member base in both size and quality.
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.