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Buy These 4 Low-Beta Stocks to Counter Market Volatility
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Despite the stock market benefiting from an upward revision in GDP, investors remain uncertain about the duration of the Federal Reserve's restrictive monetary policy. This uncertainty is causing market volatility, prompting an immediate need to construct a portfolio comprising low-beta stocks. Such securities are expected to yield strong returns and provide a safeguard against choppy market conditions.
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 a 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 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 the 17 stocks that qualified for the screening:
eGain Corporation is a well-known provider of a knowledge management platform for customer engagement. eGain is banking on its industry-leading Knowledge Hub, for which inbound interest and market demand remain handsome.
Huron is being aided by solid organic growth in each of its operating segments. The top line of the global professional services firm is continually being favored by rising demand for consulting and managed services and digital capabilities.
Stride maintains a stable business model by revolutionizing the educational experiences of individuals through the utilization of innovative, high-quality, technology-enabled educational solutions.
Southwest Gas Holdings is making progress in its transition to a pure-play natural gas leader. The company's affordable energy solutions are witnessing heightened demand from its growing customer base.
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.
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Buy These 4 Low-Beta Stocks to Counter Market Volatility
Despite the stock market benefiting from an upward revision in GDP, investors remain uncertain about the duration of the Federal Reserve's restrictive monetary policy. This uncertainty is causing market volatility, prompting an immediate need to construct a portfolio comprising low-beta stocks. Such securities are expected to yield strong returns and provide a safeguard against choppy market conditions.
In this regard, stocks like Huron (HURN - Free Report) , Stride Inc. (LRN - Free Report) , eGain Corporation (EGAN - Free Report) and Southwest Gas Holdings Inc. (SWX - Free Report) are worth betting on.
Understanding 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 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 a 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 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 the 17 stocks that qualified for the screening:
eGain Corporation is a well-known provider of a knowledge management platform for customer engagement. eGain is banking on its industry-leading Knowledge Hub, for which inbound interest and market demand remain handsome.
Huron is being aided by solid organic growth in each of its operating segments. The top line of the global professional services firm is continually being favored by rising demand for consulting and managed services and digital capabilities.
Stride maintains a stable business model by revolutionizing the educational experiences of individuals through the utilization of innovative, high-quality, technology-enabled educational solutions.
Southwest Gas Holdings is making progress in its transition to a pure-play natural gas leader. The company's affordable energy solutions are witnessing heightened demand from its growing customer base.
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.