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Buy These 4 Low-Beta Stocks to Counter Market Volatility
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The stock market is benefiting from a January jobs report that surpassed the expectations of most analysts. However, the optimism is tempered by Federal Reserve Chair Jerome Powell's statement on Wednesday indicating that the central bank is unlikely to reduce rates in March. Thus, the market will remain 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 The Progressive Corporation (PGR - Free Report) , Booz Allen Hamilton Holding Corporation (BAH - Free Report) , Atour Lifestyle Holdings Limited (ATAT - 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 six stocks that qualified for the screening:
In the domestic market, The Progressive Corporation is among the largest auto insurers. The company continues to bank on increasing net earned premiums and is expected to witness earnings growth of 41% this year.
Booz Allen Hamilton Holding is a leading provider of management and technology consulting, analytics, engineering and digital solutions. In the federal defense and civil markets, the company is witnessing excellent organic revenue growth.
Atour Lifestyle Holdings is a well-known hospitality and lifestyle company in China. It is gaining from increasing occupancy rates and its hotel network expansion.
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.
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
The stock market is benefiting from a January jobs report that surpassed the expectations of most analysts. However, the optimism is tempered by Federal Reserve Chair Jerome Powell's statement on Wednesday indicating that the central bank is unlikely to reduce rates in March. Thus, the market will remain 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 The Progressive Corporation (PGR - Free Report) , Booz Allen Hamilton Holding Corporation (BAH - Free Report) , Atour Lifestyle Holdings Limited (ATAT - 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 six stocks that qualified for the screening:
In the domestic market, The Progressive Corporation is among the largest auto insurers. The company continues to bank on increasing net earned premiums and is expected to witness earnings growth of 41% this year.
Booz Allen Hamilton Holding is a leading provider of management and technology consulting, analytics, engineering and digital solutions. In the federal defense and civil markets, the company is witnessing excellent organic revenue growth.
Atour Lifestyle Holdings is a well-known hospitality and lifestyle company in China. It is gaining from increasing occupancy rates and its hotel network expansion.
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.
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.