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It is a common misconception that only risky stocks generate lucrative returns. This is because such securities prove profitable only when the market is bullish.
We have created a strategy that shows less-risky stocks can generate impressive returns when certain other parameters are considered.
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.
Here are five of the 24 stocks that qualified the screening:
Headquartered in Los Angeles, CA, Guess?, Inc. (GES - Free Report) , being a gloabl operator of retail stores, is primarily involved in designing and distributing a wide variety of apparel, watches and other consumer products. In fiscal year 2020 and 2021, the stock is likely to witness earnings growth of roughly 33% and 29%, respectively.
North American Construction Group Ltd. (NOA - Free Report) is primarily involved in providing services related to heavy construction and mining. The company is likely to see earnings growth of 228.6% and 12.7% through 2019 and 2020, respectively.
Headquartered in Washington, District of Columbia, FTI Consulting Inc (FCN - Free Report) primarily offers services related to business advisory. For 2019 and 2020, the stock is likely to see earnings growth of 35.5% and 2.5%, respectively.
Hibbett Sports, Inc. (HIBB - Free Report) , headquartered in Birmingham, AL, primarily offers athletic and fashion apparel through its retail stores. The stock is likely to see earnings growth of 23% and 6% in fiscal year 2020 and 2021, respectively.
Hallmark Financial Services, Inc. (HALL - Free Report) , headquartered in Dallas, TX, is a leading property and casualty insurance firm. For 2019 and 2020, the stock is likely to see earnings growth of 42% and 12.2%, respectively.
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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5 Low-Beta Stocks to Brush Off Volatility Woes
It is a common misconception that only risky stocks generate lucrative returns. This is because such securities prove profitable only when the market is bullish.
We have created a strategy that shows less-risky stocks can generate impressive returns when certain other parameters are considered.
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.
Here are five of the 24 stocks that qualified the screening:
Headquartered in Los Angeles, CA, Guess?, Inc. (GES - Free Report) , being a gloabl operator of retail stores, is primarily involved in designing and distributing a wide variety of apparel, watches and other consumer products. In fiscal year 2020 and 2021, the stock is likely to witness earnings growth of roughly 33% and 29%, respectively.
North American Construction Group Ltd. (NOA - Free Report) is primarily involved in providing services related to heavy construction and mining. The company is likely to see earnings growth of 228.6% and 12.7% through 2019 and 2020, respectively.
Headquartered in Washington, District of Columbia, FTI Consulting Inc (FCN - Free Report) primarily offers services related to business advisory. For 2019 and 2020, the stock is likely to see earnings growth of 35.5% and 2.5%, respectively.
Hibbett Sports, Inc. (HIBB - Free Report) , headquartered in Birmingham, AL, primarily offers athletic and fashion apparel through its retail stores. The stock is likely to see earnings growth of 23% and 6% in fiscal year 2020 and 2021, respectively.
Hallmark Financial Services, Inc. (HALL - Free Report) , headquartered in Dallas, TX, is a leading property and casualty insurance firm. For 2019 and 2020, the stock is likely to see earnings growth of 42% and 12.2%, respectively.
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.