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3 Low-Beta Stocks to Minimize Portfolio Risk: LQDA, PBF & FET
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Key Takeaways
Liquidia is seeing rapid YUTREPIA adoption, rising referrals, a broader prescriber base and market share.
PBF Energy's strong refinery utilization may help offset elevated input costs driven by high oil prices.
FET is reducing debt and using free cash flow to support growth and its balance sheet.
The stock market is likely to remain volatile as uncertainty persists, with no clarity on when the Strait of Hormuz, which carries significant oil volumes, will reopen. With fears dominating the market, it is advisable for investors to increase their allocation to low-beta stocks. Companies that seem to be good bets now are Liquidia Corporation (LQDA - Free Report) , PBF Energy (PBF - Free Report) and Forum Energy Technologies Inc (FET - Free Report) .
What Does Beta of a Stock Measure?
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 Using Research Wizard:
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 (Strong Buy):Zacks Rank #1 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 three of the 23 stocks that qualified for the screening:
Liquidia
Liquidia is experiencing rapid growth in YUTREPIA adoption, increasing patient referrals, an expanding prescriber base and rising market share. The company has achieved profitability and is generating positive cash flow, supported by a strong cash position. It is also pursuing expansion into additional indications and larger market opportunities through ongoing and planned clinical developments.
PBF Energy
PBF Energy is among the leading refiners in the United States. High refinery utilization amid resilient U.S. demand is expected to continue to offset the negative impacts of elevated input costs, driven by high oil prices. This should drive PBF’s bottom line.
Forum Energy Technologies
Forum Energy is well-positioned to capitalize on growing global energy demand, as it is a well-known provider of equipment and solutions to companies for finding and producing oil and natural gas. FET is strongly focused on debt reduction and strategic investments, while allocating a significant proportion of its free cash flow to strengthen its balance sheet and support long-term growth initiatives.
View the Zacks #1 Rank List
Image: Shutterstock
3 Low-Beta Stocks to Minimize Portfolio Risk: LQDA, PBF & FET
Key Takeaways
The stock market is likely to remain volatile as uncertainty persists, with no clarity on when the Strait of Hormuz, which carries significant oil volumes, will reopen. With fears dominating the market, it is advisable for investors to increase their allocation to low-beta stocks. Companies that seem to be good bets now are Liquidia Corporation (LQDA - Free Report) , PBF Energy (PBF - Free Report) and Forum Energy Technologies Inc (FET - Free Report) .
What Does Beta of a Stock Measure?
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 Using Research Wizard:
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 (Strong Buy):Zacks Rank #1 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 three of the 23 stocks that qualified for the screening:
Liquidia
Liquidia is experiencing rapid growth in YUTREPIA adoption, increasing patient referrals, an expanding prescriber base and rising market share. The company has achieved profitability and is generating positive cash flow, supported by a strong cash position. It is also pursuing expansion into additional indications and larger market opportunities through ongoing and planned clinical developments.
PBF Energy
PBF Energy is among the leading refiners in the United States. High refinery utilization amid resilient U.S. demand is expected to continue to offset the negative impacts of elevated input costs, driven by high oil prices. This should drive PBF’s bottom line.
Forum Energy Technologies
Forum Energy is well-positioned to capitalize on growing global energy demand, as it is a well-known provider of equipment and solutions to companies for finding and producing oil and natural gas. FET is strongly focused on debt reduction and strategic investments, while allocating a significant proportion of its free cash flow to strengthen its balance sheet and support long-term growth initiatives.