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Buy These 4 Low-Beta Stocks to Counter Market Volatility
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Investors are lowering their expectations for interest rate cuts this year. Numerous analysts believe that, even with a gradual reduction in the federal rate, monetary policy will remain restrictive, potentially impacting economic activities adversely. The uncertainty may make the market volatile, 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 11 stocks that qualified for the screening:
Otter Tail Corporation is a leading player in electric utility and manufacturing businesses. Recovery of rate base investments continues to drive the firm. For 2024, Otter Tail has witnessed upward earnings estimate revisions in the past 60 days.
Stride maintains a stable business model by revolutionizing the educational experiences of individuals through the utilization of innovative, high-quality and technology-enabled educational solutions.
Regeneron Pharmaceuticals is widely recognized as a prominent biotechnology company. With a robust business model, it engages in the discovery, development and commercialization of life-changing medications. The company is involved in improving its traditional drug development process.
Kanzhun Limited, a prominent online recruitment platform in China, is benefiting from a surge in user growth and heightened user engagement. For 2024, the company is witnessing upward earnings estimate revisions over the past 60 days.
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
Investors are lowering their expectations for interest rate cuts this year. Numerous analysts believe that, even with a gradual reduction in the federal rate, monetary policy will remain restrictive, potentially impacting economic activities adversely. The uncertainty may make the market volatile, 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 Otter Tail Corporation (OTTR - Free Report) , Regeneron Pharmaceuticals, Inc. (REGN - Free Report) , Kanzhun Limited (BZ - Free Report) and Stride Inc. (LRN - 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 11 stocks that qualified for the screening:
Otter Tail Corporation is a leading player in electric utility and manufacturing businesses. Recovery of rate base investments continues to drive the firm. For 2024, Otter Tail has witnessed upward earnings estimate revisions in the past 60 days.
Stride maintains a stable business model by revolutionizing the educational experiences of individuals through the utilization of innovative, high-quality and technology-enabled educational solutions.
Regeneron Pharmaceuticals is widely recognized as a prominent biotechnology company. With a robust business model, it engages in the discovery, development and commercialization of life-changing medications. The company is involved in improving its traditional drug development process.
Kanzhun Limited, a prominent online recruitment platform in China, is benefiting from a surge in user growth and heightened user engagement. For 2024, the company is witnessing upward earnings estimate revisions over the past 60 days.
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.