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Beat Coronavirus Blues With These 5 Low-Beta Stocks
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The coronavirus pandemic has made the stock market extremely volatile. Hence, it is of paramount importance to create a portfolio of low-beta stocks that are protected against market volatility and have the potential to deliver healthy returns.
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 26 stocks that qualified the screening:
Based in Nelsonville, OH, Rocky Brands, Inc. (RCKY - Free Report) is primarily engaged in designing and marketing finest footwear. In the past 60 days, the stock has witnessed upward earnings estimate revisions for 2020.
Headquartered in Washington, District of Columbia, FTI Consulting Inc (FCN - Free Report) primarily offers services related to business advisory. Notably, the company surpassed the Zacks Consensus Estimate in three of the prior four quarters, the positive earnings surprise being roughly 48%, on average. Also, in the past 60 days, the stock has witnessed upward earnings estimate revisions for 2020.
Headquartered in El Segundo, CA, Stamps.com Inc. primarily provides solutions related to shipping through the Internet. The company surpassed the Zacks Consensus Estimate in each of the prior four quarters, the average positive earnings surprise being 55.96%. Also, the Zacks Consensus Estimate for 2020 earnings has been revised upward over the prior 60 days.
Sprouts Farmers Market, Inc. (SFM - Free Report) , based in Phoenix, AZ, is among the fastest growing retailers in the domestic market and primarily offers affordable organic food products. The stock is likely to see earnings growth of 4.8% and 3.3% in 2020 and 2021, respectively.
Dr. Reddy’s Laboratories Ltd. (RDY - Free Report) , headquartered in Hyderabad, India, is the provider of innovative medicines at affordable rates. The company has seen positive earnings estimate revisions for fiscal 2020 and 2021, 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.
Image: Bigstock
Beat Coronavirus Blues With These 5 Low-Beta Stocks
The coronavirus pandemic has made the stock market extremely volatile. Hence, it is of paramount importance to create a portfolio of low-beta stocks that are protected against market volatility and have the potential to deliver healthy returns.
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 26 stocks that qualified the screening:
Based in Nelsonville, OH, Rocky Brands, Inc. (RCKY - Free Report) is primarily engaged in designing and marketing finest footwear. In the past 60 days, the stock has witnessed upward earnings estimate revisions for 2020.
Headquartered in Washington, District of Columbia, FTI Consulting Inc (FCN - Free Report) primarily offers services related to business advisory. Notably, the company surpassed the Zacks Consensus Estimate in three of the prior four quarters, the positive earnings surprise being roughly 48%, on average. Also, in the past 60 days, the stock has witnessed upward earnings estimate revisions for 2020.
Headquartered in El Segundo, CA, Stamps.com Inc. primarily provides solutions related to shipping through the Internet. The company surpassed the Zacks Consensus Estimate in each of the prior four quarters, the average positive earnings surprise being 55.96%. Also, the Zacks Consensus Estimate for 2020 earnings has been revised upward over the prior 60 days.
Sprouts Farmers Market, Inc. (SFM - Free Report) , based in Phoenix, AZ, is among the fastest growing retailers in the domestic market and primarily offers affordable organic food products. The stock is likely to see earnings growth of 4.8% and 3.3% in 2020 and 2021, respectively.
Dr. Reddy’s Laboratories Ltd. (RDY - Free Report) , headquartered in Hyderabad, India, is the provider of innovative medicines at affordable rates. The company has seen positive earnings estimate revisions for fiscal 2020 and 2021, 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.