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Fight Market Volatility With These 5 Low-Beta Stocks
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Most investors believe that only risky stocks yield handsome returns. However, the strategy works well only when the market is bullish.
There are other plans that can be created according to the investment objectives of individual clients. In this article, we have presented a strategy that shows healthy returns can also be earned with a low-risk portfolio only when some other parameters are kept in mind.
Beta Understanding
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.
Here are five of the 30 stocks that qualified the screening:
Through premier universities, Laureate Education Inc. (LAUR - Free Report) — headquartered in Baltimore, MD — offers higher education courses. The company managed to beat the Zacks Consensus Estimate in three of the past four quarters, the average positive earnings surprise being 14.4%.
Jabil, Inc. (JBL - Free Report) , headquartered in Saint Petersburg, FL, is primarily engaged in offering services related to electronic manufacturing. The stock beat the Zacks Consensus Estimate in the last four quarters. For fiscal 2019 and 2020, the stock will likely post earnings growth of 13.4% and 12.9%, respectively.
Casey’s General Stores, Inc. (CASY - Free Report) , headquartered in Ankeny, IA, is primarily engaged in operating convenience shops. The company is expected to see earnings growth of 30.9% and 3.4% in fiscal 2019 and fiscal 2020, respectively.
Abercrombie & Fitch Company (ANF - Free Report) , headquartered in New Albany, OH, is one of the world’s elite specialty retailer for apparel. The company beat the Zacks Consensus Estimate in the prior quarters, the average positive earnings surprise being 88.6%.
Based in Houston, TX, CenterPoint Energy, Inc. (CNP - Free Report) is involved in distributing natural gas. The company posted an average positive earnings surprise of almost 6% in the past four quarters. In 2019, the stock is expected to post earnings growth of 5.9%.
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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Fight Market Volatility With These 5 Low-Beta Stocks
Most investors believe that only risky stocks yield handsome returns. However, the strategy works well only when the market is bullish.
There are other plans that can be created according to the investment objectives of individual clients. In this article, we have presented a strategy that shows healthy returns can also be earned with a low-risk portfolio only when some other parameters are kept in mind.
Beta Understanding
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.
Here are five of the 30 stocks that qualified the screening:
Through premier universities, Laureate Education Inc. (LAUR - Free Report) — headquartered in Baltimore, MD — offers higher education courses. The company managed to beat the Zacks Consensus Estimate in three of the past four quarters, the average positive earnings surprise being 14.4%.
Jabil, Inc. (JBL - Free Report) , headquartered in Saint Petersburg, FL, is primarily engaged in offering services related to electronic manufacturing. The stock beat the Zacks Consensus Estimate in the last four quarters. For fiscal 2019 and 2020, the stock will likely post earnings growth of 13.4% and 12.9%, respectively.
Casey’s General Stores, Inc. (CASY - Free Report) , headquartered in Ankeny, IA, is primarily engaged in operating convenience shops. The company is expected to see earnings growth of 30.9% and 3.4% in fiscal 2019 and fiscal 2020, respectively.
Abercrombie & Fitch Company (ANF - Free Report) , headquartered in New Albany, OH, is one of the world’s elite specialty retailer for apparel. The company beat the Zacks Consensus Estimate in the prior quarters, the average positive earnings surprise being 88.6%.
Based in Houston, TX, CenterPoint Energy, Inc. (CNP - Free Report) is involved in distributing natural gas. The company posted an average positive earnings surprise of almost 6% in the past four quarters. In 2019, the stock is expected to post earnings growth of 5.9%.
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.