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High-Beta ETFs & Stocks to Tap the Soaring Stock Market

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After a broad market sell-off in March, Wall Street made a strong comeback on growing optimism about the pace of economic recovery. The easing of lockdown measures and reopening of the economy have resulted in an uptick in activities that has bolstered investors’ confidence. The latest bouts of data indicate that the economy is recovering faster than expected from the coronavirus lockdown and the worst is over for the nation's economy.

A massive stimulus flowing into the economy as well as hopes of the potential coronavirus vaccine added to the strength. Notably, the S&P 500 erased all losses for the year and has turned positive while Nasdaq hit an all-time high. Not only did booming technology and communication sector lead the rally, but also a solid rebound in the energy sector and the air travel industry helped (read: Nasdaq 100 Hits New Highs: 5 Best Stocks in the ETF).   

While every corner of the market is enjoying this ascent, high-beta ETFs and stocks seem a perfect bet at present.

Why High Beta?

Beta measures the price volatility of stocks or funds relative to the overall market. It has a direct relationship to market movements. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile, while a beta of less than 1 indicates the stock price or fund is less volatile than the market.

That said, high-beta stocks seek to capitalize on consistent growth with market-beating returns. This is because when markets soar, high-beta stocks experience larger gains than the broader market counterparts and thus, outpace the rivals. However, these exhibit a higher level of volatility.

Given this bullishness, investors could find the following ETFs and stocks as intriguing options:

ETF Picks

We have chosen ETFs that are not confined to a specific sector or industry but offer exposure to the broader stock market.

Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report)

This fund provides pure exposure to the small-cap stock that exhibit strong value characteristics by tracking the S&P SmallCap 600 Pure Value Index (read: 5 Sector ETFs at the Forefront of the Small-Cap Rally).

Zacks Rank: #3 (Hold)
Beta: 1.60
AUM: $104.5 million
Expense Ratio: 0.35%

Invesco S&P MidCap 400 Pure Value ETF (RFV - Free Report)

This product offers exposure to the mid-cap stocks that exhibit strong value characteristics by tracking the S&P Midcap 400 Pure Value Index.

Zacks Rank: #3
Beta: 1.59
AUM: $68.7 million
Expense Ratio: 0.35%

Salt truBeta High Exposure Fund (SLT - Free Report)

This fund targets U.S. large and midcap stocks expected to move more than the broader market and follows the Salt High truBeta US Market Index.

Zacks Rank: N/A
Beta: 1.58
AUM: $17.7 million
Expense Ratio: 0.29%

First Trust Dorsey Wright Momentum & Value ETF (DVLU - Free Report)

This fund tracks the Dorsey Wright Momentum Plus Value Index, which measures the performance of the 50 most undervalued stocks within the NASDAQ US Large Mid Cap Index that maintain high levels of relative strength.

Zacks Rank: N/A
Beta: 1.57
AUM: $15 million
Expense Ratio: 0.60%

Invesco S&P 500 High Beta ETF (SPHB - Free Report)

This fund offers exposure to stocks with the highest sensitivity to market movements, or beta over the past 12 months. It follows the S&P 500 High Beta Index.

Zacks Rank: N/A
Beta: 1.56
AUM: $140.5 million
Expense Ratio: 0.25%

Stocks Picks

We have chosen stocks with a top Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of B or better along with high beta. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gulfport Energy Corporation (GPOR - Free Report)

It is engaged in the acquisition, exploration, development and production of oil and natural gas properties in the United States (read: Crude Saw Best Month Ever: Are Energy ETFs Ready to Jump?).

Zacks Rank: #2
VGM Score: A
Beta: 6.60
Market Cap: $270.2 million

Camping World Holdings Inc. (CWH - Free Report)

It is a provider of services, protection plans, products and resources for recreational vehicle enthusiasts.

Zacks Rank: #2
VGM Score: A
Beta: 4.07
Market Cap: $1.95 billion

Adient PLC (ADNT - Free Report)

It is one of the world’s largest automotive seating suppliers.

Zacks Rank: #2
VGM Score: A
Beta: 3.58
Market Cap: $2.01 billion

Targa Resources Inc. (TRGP - Free Report)

It owns general and limited partner interests in Targa Resources Partners LP, engaged in providing midstream natural gas and natural gas liquid services in the United States.

Zacks Rank: #2
VGM Score: A
Beta: 3.23
Market Cap: $5.46 billion

Immunic Inc. (IMUX - Free Report)

This clinical-stage biopharmaceutical company is engaged in developing a pipeline of selective oral immunology therapies aimed at treating chronic inflammatory and autoimmune diseases including ulcerative colitis, Crohn's disease, relapsing-remitting multiple sclerosis and psoriasis (read: Race for Coronavirus Vaccine Heats Up: Biotech ETFs to Gain).

Zacks Rank: #2
VGM Score: B
Beta: 3.16
Market Cap: $166.6 million

Bottom Line
 
Given the bullish backdrop, high-beta products will continue to generate outsized returns in the coming weeks and are suitable for risk-tolerant investors, given their volatile nature.

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