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.
Buy These 5 Low-Beta Stocks to Fight Market Volatility
Read MoreHide Full Article
“If you are not willing to risk the unusual, you will have to settle for the ordinary” – Jim Rohn.
This is widely practiced in the investment world as to garner high returns one has to gamble. The statement specifically holds true when the market conditions are bullish. However, an investor should also prepare for a reversal in market conditions.
In this article, we have established the fact that a portfolio of low-risk stocks can be rewarding if a few other parameters are taken into account.
Understanding of Beta
Beta measures the volatility or risks to a security relative to the market (we are considering the S&P 500 here). That is, beta measures the extent to which the price of a stock moves with respect to the market.
If the beta is equal to 1 it means that the stock is as volatile as the market. So, a stock is relatively more volatile if it has beta greater than 1 and less volatile if beta is less than 1.
For example, if the beta is 1.8 then the stock will witness 80% more movement than the market. Hence, we can say that if the market goes up, the stock will outperform by 80%. Conversely, if the market plunges, the stock will lose much more value than the market.
Building a Low-Risk Portfolio
In order to find stocks with lower-than-market volatility, we added beta between 0 and 0.6 as our main criterion for screening. However, we need to keep in mind that low beta is not the only metric to be considered for choosing stocks in a volatile market. Hence to reach the winning strategy, we have considered a few additional criteria.
Percentage Change in Price in the last 4 Weeks: We considered those stocks that saw positive price movement over the last month.
Average 20 Day Volume greater than or equal to 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.
Here are five of the 20 stocks that fit the bill:
B&G Foods Inc. (BGS - Free Report) – headquartered in Parsippany, NJ – is involved in manufacturing, selling and distributing portfolio of shelf-stable along with frozen food and household products in the U.S, Canada, and Puerto Rico. The company is anticipated to post 42.2% year-over-year earnings improvement in the current year. On top of that, over the last four quarters, the company posted an average positive earnings surprise of 12.16%.
Central Garden & Pet Company (CENT - Free Report) – based in Walnut Creek, CA – is a producer and marketer of pet products in the U.S. The company beat the Zacks Consensus Estimate in each of the last four quarters, with the average being 72.53%. Moreover, the company is projected to post year-over-year earnings growth of almost 8% for the current year.
Movado Group Inc. (MOV - Free Report) – based in Paramus, NJ – is a designer, developer, marketer and distributer of watches in the U.S. and also globally. The company posted an average positive earnings surprise of 10.53%, beating the Zacks Consensus Estimate in three of the last four quarters.
Exa Corporation – headquartered in Burlington, MA – is the developer and seller of simulation software and services for vehicle manufacturers all over the world. For the current year, the company is expected to post 54.05% year-over-year earnings growth. Additionally, Exa Corporation beat the Zacks Consensus Estimate in all of the past four quarters, with an average earnings surprise of 68.06%.
SCANA Corporation – based in Cayce, SC – is involved in the generation, distribution and sale of electricity to retail and wholesale customers in South Carolina. SCANA will likely post year-over-year earnings growth of 11.4% in the current year. On top of that, over the last four quarters, the company posted an average positive earnings surprise of 6.74%.
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.
Zacks Restaurant Recommendations:In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Buy These 5 Low-Beta Stocks to Fight Market Volatility
“If you are not willing to risk the unusual, you will have to settle for the ordinary” – Jim Rohn.
This is widely practiced in the investment world as to garner high returns one has to gamble. The statement specifically holds true when the market conditions are bullish. However, an investor should also prepare for a reversal in market conditions.
In this article, we have established the fact that a portfolio of low-risk stocks can be rewarding if a few other parameters are taken into account.
Understanding of Beta
Beta measures the volatility or risks to a security relative to the market (we are considering the S&P 500 here). That is, beta measures the extent to which the price of a stock moves with respect to the market.
If the beta is equal to 1 it means that the stock is as volatile as the market. So, a stock is relatively more volatile if it has beta greater than 1 and less volatile if beta is less than 1.
For example, if the beta is 1.8 then the stock will witness 80% more movement than the market. Hence, we can say that if the market goes up, the stock will outperform by 80%. Conversely, if the market plunges, the stock will lose much more value than the market.
Building a Low-Risk Portfolio
In order to find stocks with lower-than-market volatility, we added beta between 0 and 0.6 as our main criterion for screening. However, we need to keep in mind that low beta is not the only metric to be considered for choosing stocks in a volatile market. Hence to reach the winning strategy, we have considered a few additional criteria.
Percentage Change in Price in the last 4 Weeks: We considered those stocks that saw positive price movement over the last month.
Average 20 Day Volume greater than or equal to 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.
Here are five of the 20 stocks that fit the bill:
B&G Foods Inc. (BGS - Free Report) – headquartered in Parsippany, NJ – is involved in manufacturing, selling and distributing portfolio of shelf-stable along with frozen food and household products in the U.S, Canada, and Puerto Rico. The company is anticipated to post 42.2% year-over-year earnings improvement in the current year. On top of that, over the last four quarters, the company posted an average positive earnings surprise of 12.16%.
Central Garden & Pet Company (CENT - Free Report) – based in Walnut Creek, CA – is a producer and marketer of pet products in the U.S. The company beat the Zacks Consensus Estimate in each of the last four quarters, with the average being 72.53%. Moreover, the company is projected to post year-over-year earnings growth of almost 8% for the current year.
Movado Group Inc. (MOV - Free Report) – based in Paramus, NJ – is a designer, developer, marketer and distributer of watches in the U.S. and also globally. The company posted an average positive earnings surprise of 10.53%, beating the Zacks Consensus Estimate in three of the last four quarters.
Exa Corporation – headquartered in Burlington, MA – is the developer and seller of simulation software and services for vehicle manufacturers all over the world. For the current year, the company is expected to post 54.05% year-over-year earnings growth. Additionally, Exa Corporation beat the Zacks Consensus Estimate in all of the past four quarters, with an average earnings surprise of 68.06%.
SCANA Corporation – based in Cayce, SC – is involved in the generation, distribution and sale of electricity to retail and wholesale customers in South Carolina. SCANA will likely post year-over-year earnings growth of 11.4% in the current year. On top of that, over the last four quarters, the company posted an average positive earnings surprise of 6.74%.
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/.
Zacks Restaurant Recommendations:In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »