We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Low-Beta Tech Stocks to Hedge Against the Volatile Market
Read MoreHide Full Article
Since the beginning of 2022, Wall Street has been witnessing high volatility due to several economic issues. These include Federal Reserve’s aggressive interest rate hikes, the Russia-Ukraine war-led energy crisis and the persistent inflation over the last year. Stocks in the technology sector have been the worst hit amid the broader market sell-off so far this year.
The major U.S. stock market indices like the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 have plunged 14.6%, 26.3% and 18.2%, respectively, year to date (YTD). The Zacks Computer and Technology sector has slumped 31.8% in the same time frame.
The near-term prospects of the tech sector look gloomy, given the supply-chain disruptions, led by the acute shortage of chips and other input components, and currency fluctuations. On top of that, the Federal Reserve’s probable announcement of a sharp interest rate hike of 0.75% (if not a whole 1%) at its upcoming policy meet to combat inflation will likely increase vulnerability in the tech space.
The challenges are likely to persist in the near term, affecting the price performances of most tech stocks. But the question is, should investors interested in tech stocks stay away from investing in the space?
We believe that investing in low-beta tech stocks like JOYY (YY - Free Report) , CTS Corporation (CTS - Free Report) , Simulations Plus (SLP - Free Report) and Absolute Software Corporation can aid investors in hedging against the current highly volatile market environment.
Beta measures a stock's systematic risk or volatility compared with the market. Therefore, a stock with a beta of less than 1.0 will be less sensitive to the market’s movements than a stock with more than 1.0 beta.
Picking the Right Low-Beta Stocks
We have run the Zacks Stocks Screener to identify stocks with a beta between 0.45 and 0.85. We have narrowed our search by considering stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
All four stocks offer a solid income stream, as these are dividend-paying stocks and are desirable during economic uncertainty. Currently, the stocks are preferred over the non-dividend paying stocks due to their shielding capability through fixed income and lesser sensitivity to price swings. Dividend-paying stocks act as a hedge against economic uncertainty and offer downside protection, with a consistent increase in payouts.
Our Picks
CTS Corporation is a leading designer and manufacturer of products that Sense, Connect and Move. It manufactures sensors, actuators and electronic components, and supplies the products to original equipment manufacturers in the aerospace, communications, defense, industrial, information technology, medical and transportation markets.
This Zacks Rank #1 company has a beta of 0.78. Shares of CTS have jumped 16.9% YTD.
Headquartered in Lisle, IL, CTS has been gaining from solid momentum across the premium non-transportation end markets. Its disciplined capital allocation and strategic acquisitions bode well. The company’s TEWA Temperature Sensors buyout in March bolstered its presence in Europe. It is anticipated to contribute to CTS’s financial performance in the quarters ahead.
The Zacks Consensus Estimate for CTS’s 2022 earnings has improved to $2.55 per share from $2.40 over the past 60 days, implying an increase of 127.7% from the year-ago reported figure. For 2023, the consensus mark for earnings has been revised 5.9% upward to $2.70 per share over the past 60 days, indicating 5.9% year-over-year growth.
JOYY is a GUANGZHOU, China-based social media service provider. The company operates video and audio-based social media platforms like Bigo Live, Likee, Hago and imo, which are active across China, the United States, Great Britain, Japan, Korea and some other countries in Asia.
This Zacks Rank #1 company has a beta of 0.54. Shares of YY have dipped 39.7% YTD.
Despite the macroeconomic headwinds, JOYY’s diversified global product mix and operating efficiency improvements allow it to generate continued profitability. The consensus mark for YY’s 2022 earnings has been revised upward to $1.95 per share from 69 cents over the past 30 days, implying 47.7% year-over-year growth. For 2023, the Zacks Consensus Estimate for earnings increased to $2.21 per share from $2.07 over the past 30 days, indicating 13.1% year-over-year growth.
Absolute Software is engaged in providing firmware-persistent end-point security and management solutions.
Absolute Software currently sports a Zacks Rank #1. It has a beta of 0.81. Shares of ABST have gained 16.3% YTD.
The company has been benefiting from the rising demand for cyber-security solutions, owing to a slew of data breaches, and a demand rise for security and networking products amid the growing hybrid working trend. Continued digital transformation and cloud migration strategies adopted by organizations are the key growth drivers. Synergies from last year’s NetMotion acquisition have enhanced Absolute Software’s product portfolio, helping it gain customers.
The consensus mark for ABST’s fiscal 2023 earnings has been revised upward to 47 cents per share from 8 cents over the past 30 days, indicating a 195.9% year-over-year increase. For fiscal 2024, the Zacks Consensus Estimate for earnings increased to 74 cents per share from 32 cents over the past 30 days, indicating year-over-year growth of 57.5%.
ABST has a dividend yield of 2.37% and five-year annualized dividend growth of 0.24%. Absolute Softwares’ payout ratio is 101% of earnings at present. Check ABST’s dividend history here.
Simulations Plus is a premier developer of groundbreaking drug discovery and development simulation software, which is licensed to and used in the conduct of drug research by major pharmaceutical and biotechnology companies worldwide. This Zacks Rank #2 company has a beta of 0.45. Shares of SLP have jumped 13.7% YTD.
The company has been witnessing strong demand for its GastroPlus and ADMET Predictor solutions in the software segment. The Lixoft buyout has boosted the company’s software business and has expanded its presence in the Europe market. The strength of Simulations Plus’ diversified product portfolio, including solutions like MembranePlus, DDDPlus and PKPlus, are major driving factors.
Simulations Plus has a dividend yield of 0.45% in addition to five-year annualized dividend growth of 1.05%. SLP’s payout ratio is 42% of earnings at present. Check SLP’s dividend history here.
Image: Bigstock
4 Low-Beta Tech Stocks to Hedge Against the Volatile Market
Since the beginning of 2022, Wall Street has been witnessing high volatility due to several economic issues. These include Federal Reserve’s aggressive interest rate hikes, the Russia-Ukraine war-led energy crisis and the persistent inflation over the last year. Stocks in the technology sector have been the worst hit amid the broader market sell-off so far this year.
The major U.S. stock market indices like the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 have plunged 14.6%, 26.3% and 18.2%, respectively, year to date (YTD). The Zacks Computer and Technology sector has slumped 31.8% in the same time frame.
The near-term prospects of the tech sector look gloomy, given the supply-chain disruptions, led by the acute shortage of chips and other input components, and currency fluctuations. On top of that, the Federal Reserve’s probable announcement of a sharp interest rate hike of 0.75% (if not a whole 1%) at its upcoming policy meet to combat inflation will likely increase vulnerability in the tech space.
The challenges are likely to persist in the near term, affecting the price performances of most tech stocks. But the question is, should investors interested in tech stocks stay away from investing in the space?
We believe that investing in low-beta tech stocks like JOYY (YY - Free Report) , CTS Corporation (CTS - Free Report) , Simulations Plus (SLP - Free Report) and Absolute Software Corporation can aid investors in hedging against the current highly volatile market environment.
Beta measures a stock's systematic risk or volatility compared with the market. Therefore, a stock with a beta of less than 1.0 will be less sensitive to the market’s movements than a stock with more than 1.0 beta.
Picking the Right Low-Beta Stocks
We have run the Zacks Stocks Screener to identify stocks with a beta between 0.45 and 0.85. We have narrowed our search by considering stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
All four stocks offer a solid income stream, as these are dividend-paying stocks and are desirable during economic uncertainty. Currently, the stocks are preferred over the non-dividend paying stocks due to their shielding capability through fixed income and lesser sensitivity to price swings. Dividend-paying stocks act as a hedge against economic uncertainty and offer downside protection, with a consistent increase in payouts.
Our Picks
CTS Corporation is a leading designer and manufacturer of products that Sense, Connect and Move. It manufactures sensors, actuators and electronic components, and supplies the products to original equipment manufacturers in the aerospace, communications, defense, industrial, information technology, medical and transportation markets.
This Zacks Rank #1 company has a beta of 0.78. Shares of CTS have jumped 16.9% YTD.
Headquartered in Lisle, IL, CTS has been gaining from solid momentum across the premium non-transportation end markets. Its disciplined capital allocation and strategic acquisitions bode well. The company’s TEWA Temperature Sensors buyout in March bolstered its presence in Europe. It is anticipated to contribute to CTS’s financial performance in the quarters ahead.
The Zacks Consensus Estimate for CTS’s 2022 earnings has improved to $2.55 per share from $2.40 over the past 60 days, implying an increase of 127.7% from the year-ago reported figure. For 2023, the consensus mark for earnings has been revised 5.9% upward to $2.70 per share over the past 60 days, indicating 5.9% year-over-year growth.
CTS has a dividend yield of 0.38% and its payout ratio is 7% of earnings at present. Check CTS’ dividend history here.
CTS Corporation Price and Consensus
CTS Corporation price-consensus-chart | CTS Corporation Quote
JOYY is a GUANGZHOU, China-based social media service provider. The company operates video and audio-based social media platforms like Bigo Live, Likee, Hago and imo, which are active across China, the United States, Great Britain, Japan, Korea and some other countries in Asia.
This Zacks Rank #1 company has a beta of 0.54. Shares of YY have dipped 39.7% YTD.
Despite the macroeconomic headwinds, JOYY’s diversified global product mix and operating efficiency improvements allow it to generate continued profitability. The consensus mark for YY’s 2022 earnings has been revised upward to $1.95 per share from 69 cents over the past 30 days, implying 47.7% year-over-year growth. For 2023, the Zacks Consensus Estimate for earnings increased to $2.21 per share from $2.07 over the past 30 days, indicating 13.1% year-over-year growth.
JOYY has a dividend yield of 7.4% and its payout ratio is 91% of earnings at present. Check YY’s dividend history here.
JOYY Inc. Sponsored ADR Price and Consensus
JOYY Inc. Sponsored ADR price-consensus-chart | JOYY Inc. Sponsored ADR Quote
Absolute Software is engaged in providing firmware-persistent end-point security and management solutions.
Absolute Software currently sports a Zacks Rank #1. It has a beta of 0.81. Shares of ABST have gained 16.3% YTD.
The company has been benefiting from the rising demand for cyber-security solutions, owing to a slew of data breaches, and a demand rise for security and networking products amid the growing hybrid working trend. Continued digital transformation and cloud migration strategies adopted by organizations are the key growth drivers. Synergies from last year’s NetMotion acquisition have enhanced Absolute Software’s product portfolio, helping it gain customers.
The consensus mark for ABST’s fiscal 2023 earnings has been revised upward to 47 cents per share from 8 cents over the past 30 days, indicating a 195.9% year-over-year increase. For fiscal 2024, the Zacks Consensus Estimate for earnings increased to 74 cents per share from 32 cents over the past 30 days, indicating year-over-year growth of 57.5%.
ABST has a dividend yield of 2.37% and five-year annualized dividend growth of 0.24%. Absolute Softwares’ payout ratio is 101% of earnings at present. Check ABST’s dividend history here.
Absolute Software Corporation Price
Absolute Software Corporation price | Absolute Software Corporation Quote
Simulations Plus is a premier developer of groundbreaking drug discovery and development simulation software, which is licensed to and used in the conduct of drug research by major pharmaceutical and biotechnology companies worldwide. This Zacks Rank #2 company has a beta of 0.45. Shares of SLP have jumped 13.7% YTD.
The company has been witnessing strong demand for its GastroPlus and ADMET Predictor solutions in the software segment. The Lixoft buyout has boosted the company’s software business and has expanded its presence in the Europe market. The strength of Simulations Plus’ diversified product portfolio, including solutions like MembranePlus, DDDPlus and PKPlus, are major driving factors.
Simulations Plus has a dividend yield of 0.45% in addition to five-year annualized dividend growth of 1.05%. SLP’s payout ratio is 42% of earnings at present. Check SLP’s dividend history here.
Simulations Plus, Inc. Price and Consensus
Simulations Plus, Inc. price-consensus-chart | Simulations Plus, Inc. Quote