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Combat Market Volatility With These 4 Low-Beta Stocks

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The U.S. stock market closed a little higher on Tuesday after four sessions of declines as fears of the impact of Federal Reserve's aggressively raising interest rate policy continue to put pressure on equities. While the Dow Jones Industrial Average inched up 0.28%, the S&P 500 rose 0.10% and the tech-laden Nasdaq Composite closed at 0.01% yesterday.

To keep pace with the rising inflation, global investors are recalibrating their expectations on the current quarter earnings season and pulling back their winter holiday spending. Amid market volatility and uncertainty going forward, they are too nervous about getting into the market right now.

The vicious macro challenges, ranging from the Covid-19-led supply crisis and war in Ukraine to the rising inflation and interest rate pressures, will likely continue to strain the technology sector in the next 12 months. In 2022 so far, the Zacks Computer and Technology sector slashed 35.8% while the S&P 500 and Nasdaq indices plunged 19.8% and 32.6%, respectively.

In this turmoil, we believe that investors should create a portfolio of low-beta stocks to ensure healthy returns with a shield to hedge the market’s instability. Four such stocks are Zscaler (ZS - Free Report) , Model N (MODN - Free Report) , Harmonic (HLIT - Free Report) and eGain Corporation (EGAN - Free Report) .

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 a more than 1.0 beta.

Choosing the Right Low-Beta Stocks

We have run the Zacks Stocks Screener to identify technology stocks with a beta between 0.40 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.

Our Picks

eGain is the leading provider of cloud customer engagement hub software. With presence in North America, EMEA and APAC, the company offers web customer interaction applications, social customer interaction applications and contact center applications.

Currently, eGain has a Zacks Rank #1. It has a beta of 0.41. Shares of EGAN have declined 10.3% YTD.

eGain Corporation Price and Consensus


eGain Corporation Price and Consensus

eGain Corporation price-consensus-chart | eGain Corporation Quote


eGain solutions help improve customer experience, optimize service processes and boost sales across the web, social and phone channels. Hundreds of the world's largest companies rely on eGain to transform their fragmented sales engagement and customer service operations into unified Customer Engagement Hubs. In the latest quarter, the company’s Knowledge Hub solution was adopted by some major global clients, which include a leading global airline, a U.S.-based health & benefit service provider and the Department of Taxation of one of the U.S. state governments.

The Zacks Consensus Estimate for EGAN’s fiscal 2023 earnings is pegged at 19 cents, remaining steady over the past 30 days. Consensus mark for fiscal 2024 earnings also remained steady over the past 30 days at 37 cents, suggesting a whopping 97.4% year-on-year surge.

Harmonic enables media companies and service providers to deliver ultra-high-quality broadcast and over-the-top video services to consumers globally. The company has also revolutionized cable access networking via the industry's first virtualized Converged Cable Access Platform (CCAP) solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.

Harmonic currently carries a Zacks Rank #2. It has a beta of 0.84. Shares of HLIT have gained 13.5% year to date.


Harmonic Inc. Price and Consensus


Harmonic Inc. Price and Consensus

Harmonic Inc. price-consensus-chart | Harmonic Inc. Quote


In September, Harmonic unveiled the Single Illumination System solution to ensure greater interoperability and cost savings for broadcast operators with digital terrestrial television and direct-to-home services. The solution reduces multiplex distribution costs by about 50% compared with the double satellite illumination method. It also enables broadcast operators to deliver regional channels with greater efficiency.

The consensus mark for HLIT’s 2022 earnings is pegged at 52 cents, moving up 4 cents in the past 60 days, indicating a 52.9% year-over-year rise. For 2023, the Zacks Consensus Estimate for earnings moved north at 72 cents per share from 70 cents in the past 60 days, indicating a 38.5% jump.

Model N provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote (CPQ), rebates management and regulatory compliance. Based in San Mateo, CA, the company has a significant growth opportunity in the revenue management market as it continues to replace legacy processes that were labor-intensive, error-prone, inflexible and costly.

This Zacks Rank #2 company has a beta of 0.63. Shares of MODN have gained 30.9% year to date.


Model N, Inc. Price and Consensus


Model N, Inc. Price and Consensus

Model N, Inc. price-consensus-chart | Model N, Inc. Quote


Currently, Model N is making steady progress in its transformation to a Software-as-a-Service (SaaS) based model. The company strengthened its foothold by closing multiple SaaS transactions and witnessed strong contributions from subscription booking. It manages client revenues worth billions for over 49,000 enterprises across 100 countries. Solid go-to-market strategy, new logo additions and robust sales execution are driving its top-line growth.

The consensus mark for MODN’s fiscal 2023 earnings has been revised upward to 93 cents per share from 86 cents over the past seven days, calling for a 29.2% year-over-year rise. For fiscal 2024, the Zacks Consensus Estimate for earnings increased by 2 cents to 97 cents per share over the past seven days, forecasting a year-over-year growth of 4.3%.

Zscaler is one of the leading providers of cloud-based security solutions globally. The company offers a full range of enterprise network security services, including web security, internet security, antivirus, vulnerability management, firewalls, and control over user activity in mobile, cloud computing, and Internet of things environments.

The cybersecurity firm has a Zacks Rank #2 and a beta of 0.82. Shares of ZS slumped 61.2% in the year till date.

Zscaler, Inc. Price and Consensus


Zscaler, Inc. Price and Consensus

Zscaler, Inc. price-consensus-chart | Zscaler, Inc. Quote


Zscaler distributes its cloud-based solutions to more than 150 data centers across five continents. It processes approximately 70 billion requests per day from users across more than 185 countries. At the end of fiscal 2022, the company had more than 6,700 customers globally, which includes more than 500 of the Forbes Global 2000. Very recently, ZS joined the Joint Cyber Defense Collaborative, established by the Cybersecurity and Infrastructure Security Agency, to enhance the collective cybersecurity posture of the United States and strategic global partners.

For fiscal 2023, Zscaler’s Zacks Consensus Estimate stands at $1.23 per share, moving upward by 6 cents over the past seven days. The consensus estimate foresees a 78.3% hike year-over-year. The consensus mark for fiscal 2024 is pegged at $1.68 per share, inching up by 3 cents from $1.65 over the past 30 days. The same suggests a 37.1% year-over-year gain.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Harmonic Inc. (HLIT) - free report >>

eGain Corporation (EGAN) - free report >>

Model N, Inc. (MODN) - free report >>

Zscaler, Inc. (ZS) - free report >>

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