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For lucrative returns, investors should bear significant risk. This is the general convention in the equity market. The strategy works well when the market is bullish, but the converse scenario should also be taken into account.
Following intense research, we have developed a strategy, signifying handsome return can also be earned from low risky stocks.
Meaning of Beta
Beta measures the volatility or risk of a particular asset in comparison 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 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 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 beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. But 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 one 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 five of the 15 stocks that qualified the screening:
Based in New York, G-III Apparel Group (GIII - Free Report) is the supplier of apparel for both men and women. The company beat the Zacks Consensus Estimate in two of the last four quarters with an average positive earnings surprise of 3.48%. Also, for fiscal 2018, the Zacks Consensus Estimate of earnings has been revised upward over the last 30 days.
The Boston Beer Company (SAM - Free Report) is the leading seller of alcohol beverages. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters, delivering an average positive earnings surprise of 49.99%. Moreover, the Zacks Consensus Estimate of earnings for 2017 has been revised upward over the past 60 days.
Headquartered in Greeley, CO, Pilgrim's Pride Corporation (PPC - Free Report) primarily processes and supplies fresh and frozen chicken products. For 2017, we are expecting the company to witness year-over-year earnings growth of more than 37%. The Zacks Consensus Estimate for earnings in 2017 has been revised upward over the last 60 days.
Central Garden & Pet Company (CENT - Free Report) , based in Walnut Creek, CA, is a leading producer and marketer of premium and value-oriented products focused on the lawn & garden and pet supplies markets in the United States. The company surpassed the Zacks Consensus Estimate in each of the prior four quarters with an average positive earnings surprise of 122.17%.
Based in Paramus, NJ, Movado Group (MOV - Free Report) is the leading developer of quality watches. The company posted an average positive earnings surprise of 2.54% over the last four quarters. On top of that, for fiscal 2018, the Zacks Consensus Estimate for earnings has been revised upward over the last 30 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.
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 »
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Fear of Market Volatility? Buy 5 Low-Beat Stocks
For lucrative returns, investors should bear significant risk. This is the general convention in the equity market. The strategy works well when the market is bullish, but the converse scenario should also be taken into account.
Following intense research, we have developed a strategy, signifying handsome return can also be earned from low risky stocks.
Meaning of Beta
Beta measures the volatility or risk of a particular asset in comparison 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 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 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 beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. But 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 one 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 five of the 15 stocks that qualified the screening:
Based in New York, G-III Apparel Group (GIII - Free Report) is the supplier of apparel for both men and women. The company beat the Zacks Consensus Estimate in two of the last four quarters with an average positive earnings surprise of 3.48%. Also, for fiscal 2018, the Zacks Consensus Estimate of earnings has been revised upward over the last 30 days.
The Boston Beer Company (SAM - Free Report) is the leading seller of alcohol beverages. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters, delivering an average positive earnings surprise of 49.99%. Moreover, the Zacks Consensus Estimate of earnings for 2017 has been revised upward over the past 60 days.
Headquartered in Greeley, CO, Pilgrim's Pride Corporation (PPC - Free Report) primarily processes and supplies fresh and frozen chicken products. For 2017, we are expecting the company to witness year-over-year earnings growth of more than 37%. The Zacks Consensus Estimate for earnings in 2017 has been revised upward over the last 60 days.
Central Garden & Pet Company (CENT - Free Report) , based in Walnut Creek, CA, is a leading producer and marketer of premium and value-oriented products focused on the lawn & garden and pet supplies markets in the United States. The company surpassed the Zacks Consensus Estimate in each of the prior four quarters with an average positive earnings surprise of 122.17%.
Based in Paramus, NJ, Movado Group (MOV - Free Report) is the leading developer of quality watches. The company posted an average positive earnings surprise of 2.54% over the last four quarters. On top of that, for fiscal 2018, the Zacks Consensus Estimate for earnings has been revised upward over the last 30 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.
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 »