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5 Must-Buy Low-Beta Stocks Flying High in a Volatile Market
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Wall Street grappled with severe volatility in the last two weeks after an impressive rally for 10 successive weeks that enabled the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — to exit the coronavirus-induced short bear market. However, concerns over a second wave of COVID-19 dented investors' confidence to quite an extent.
Resurgence of the deadly virus will have a strong repercussion on the ongoing reopening process of the U.S. economy after two months of lockdowns. Consequently, the much-hyped, V-shaped recovery of the U.S. economy, which is currently under recession, will be jeopardized.
Resurgence of Coronavirus Infections
According to data compiled by Johns Hopkins University, the United States reported more than 30,000 new cases of COVID-19 during Jun 19 and 20, highest since May 1. Meanwhile, at least six states recorded a spike in COVID-19 cases in last week. Moreover, 23 states, Guam and the U.S. Virgin Islands have witnessed a surge in new coronavirus cases over the past two weeks.
The World Health Organization has warned that the coronavirus pandemic is "accelerating" and "the world is in a new and dangerous phase." In The United States, Arizona, Florida and California reported record spikes in confirmed Covid-19 cases last week.
Concerns Over Economic Recovery
On Jun 8, the National Bureau of Economic Research stated that the U.S. economy is in recession since mid-February, ending the historically longest 128 months of expansions due to the coronavirus-induced devastations.
However, a series of better-than-expected data for both April and May clearly indicated that the worst is over for the U.S. economy and the pandemic-led downturn may not be as sharp as expected earlier. Several economists and financial experts have expressed quicker-than-expected recovery as all 50 states have reopened in some form or the other since the last week of May.
Investors remained highly concerned about the second wave of coronavirus cases, which will significantly delay the just-started reopening process of the U.S. economy.
Tech behemoth Apple Inc. (AAPL - Free Report) decided to re-close 11 of its stores in those states where COVID-19 cases spiked recently. Furthermore, AMC Entertainment Holdings Inc. (AMC - Free Report) , the world's largest movie theater operator, expressed fears that it may not be able to reopen 450 theaters in the United States next month due to resurgence of the coronavirus infections.
Volatility Might Persist in the Near Future
The stock-market volatility is likely to continue in the days to come. This is evident from the reading for COBE VIX — popularly known as the best fear-gauge of Wall Street. In a nutshell, the VIX indicates market's expectation of a 30-day forward-looking volatility based on the near-term S&P 500 index options (both puts and calls).
Notably, the VIX is currently at 35.12 while just two weeks ago, the fear gauge was hovering around 25. At its current level, the fear gauge is well above its last year's average range of 20. This clearly indicates that the market will remain volatile and stocks will swing widely in either direction, over the next 30 days.
Our Top Picks
At this stage, it will be prudent to invest in low-beta (beta value less than 1 but greater than zero) stocks as these will be less volatile than the broader market. We have narrowed down our search to five low-beta stocks that have provided double-digit returns in the past month.
These stocks have positive growth potential for 2020 and witnessed upward earnings estimate revision for the year in the past 30 days despite the coronavirus-induced market mayhem. Each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Smith & Wesson Brands Inc. (SWBI - Free Report) designs, manufactures and sells firearms. It offers pistols, revolvers, rifles, handcuffs and other related products and accessories. The company has an expected earnings growth rate of 143.2% for the current year (ending April 2021). The Zacks Consensus Estimate for current-year earnings has improved 108.2% over the last 30 days. The stock has a beta of 0.69 and soared 84.4% in the past month.
Zscaler Inc. (ZS - Free Report) operates as a cloud security company focusing on transforming networks and applications for a mobile and cloud-first platform. The company has an expected earnings growth rate of 39.7% for next year (ending July 2021). The Zacks Consensus Estimate for next-year earnings has improved 9.1% over the last 30 days. The stock has a beta of 0.72 and jumped 41.1% in the past month.
Sportsman's Warehouse Holdings Inc. (SPWH - Free Report) is an outdoor sporting goods retailer in the United States. Its stores offer camping products, fishing products and hunting and shooting products. The company has an expected earnings growth rate of 63.8% for the current fiscal year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved 22.2% over the last 30 days. The stock has a beta of 0.68 and climbed 26.7% in the past month.
ProQR Therapeutics N.V. (PRQR - Free Report) is a biopharmaceutical company that is engaged in the discovery and development of RNA-based therapeutics for the treatment of genetic disorders. The company has an expected earnings growth rate of 10.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13.1% over the last 30 days. The stock has a beta of 0.54 and rallied 22.7% in the past month.
Ooma Inc. (OOMA - Free Report) provides communications solutions and other connected services to small business, home and mobile users in the United States, Canada, and internationally. The company has an expected earnings growth rate of more than 100% for the current year (ending January 2021). The Zacks Consensus Estimate for next-year earnings has improved more than 100% over the last 30 days. The stock has a beta of 0.68 and surged 10.4% in the past month.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Image: Bigstock
5 Must-Buy Low-Beta Stocks Flying High in a Volatile Market
Wall Street grappled with severe volatility in the last two weeks after an impressive rally for 10 successive weeks that enabled the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — to exit the coronavirus-induced short bear market. However, concerns over a second wave of COVID-19 dented investors' confidence to quite an extent.
Resurgence of the deadly virus will have a strong repercussion on the ongoing reopening process of the U.S. economy after two months of lockdowns. Consequently, the much-hyped, V-shaped recovery of the U.S. economy, which is currently under recession, will be jeopardized.
Resurgence of Coronavirus Infections
According to data compiled by Johns Hopkins University, the United States reported more than 30,000 new cases of COVID-19 during Jun 19 and 20, highest since May 1. Meanwhile, at least six states recorded a spike in COVID-19 cases in last week. Moreover, 23 states, Guam and the U.S. Virgin Islands have witnessed a surge in new coronavirus cases over the past two weeks.
The World Health Organization has warned that the coronavirus pandemic is "accelerating" and "the world is in a new and dangerous phase." In The United States, Arizona, Florida and California reported record spikes in confirmed Covid-19 cases last week.
Concerns Over Economic Recovery
On Jun 8, the National Bureau of Economic Research stated that the U.S. economy is in recession since mid-February, ending the historically longest 128 months of expansions due to the coronavirus-induced devastations.
However, a series of better-than-expected data for both April and May clearly indicated that the worst is over for the U.S. economy and the pandemic-led downturn may not be as sharp as expected earlier. Several economists and financial experts have expressed quicker-than-expected recovery as all 50 states have reopened in some form or the other since the last week of May.
Investors remained highly concerned about the second wave of coronavirus cases, which will significantly delay the just-started reopening process of the U.S. economy.
Tech behemoth Apple Inc. (AAPL - Free Report) decided to re-close 11 of its stores in those states where COVID-19 cases spiked recently. Furthermore, AMC Entertainment Holdings Inc. (AMC - Free Report) , the world's largest movie theater operator, expressed fears that it may not be able to reopen 450 theaters in the United States next month due to resurgence of the coronavirus infections.
Volatility Might Persist in the Near Future
The stock-market volatility is likely to continue in the days to come. This is evident from the reading for COBE VIX — popularly known as the best fear-gauge of Wall Street. In a nutshell, the VIX indicates market's expectation of a 30-day forward-looking volatility based on the near-term S&P 500 index options (both puts and calls).
Notably, the VIX is currently at 35.12 while just two weeks ago, the fear gauge was hovering around 25. At its current level, the fear gauge is well above its last year's average range of 20. This clearly indicates that the market will remain volatile and stocks will swing widely in either direction, over the next 30 days.
Our Top Picks
At this stage, it will be prudent to invest in low-beta (beta value less than 1 but greater than zero) stocks as these will be less volatile than the broader market. We have narrowed down our search to five low-beta stocks that have provided double-digit returns in the past month.
These stocks have positive growth potential for 2020 and witnessed upward earnings estimate revision for the year in the past 30 days despite the coronavirus-induced market mayhem. Each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Smith & Wesson Brands Inc. (SWBI - Free Report) designs, manufactures and sells firearms. It offers pistols, revolvers, rifles, handcuffs and other related products and accessories. The company has an expected earnings growth rate of 143.2% for the current year (ending April 2021). The Zacks Consensus Estimate for current-year earnings has improved 108.2% over the last 30 days. The stock has a beta of 0.69 and soared 84.4% in the past month.
Zscaler Inc. (ZS - Free Report) operates as a cloud security company focusing on transforming networks and applications for a mobile and cloud-first platform. The company has an expected earnings growth rate of 39.7% for next year (ending July 2021). The Zacks Consensus Estimate for next-year earnings has improved 9.1% over the last 30 days. The stock has a beta of 0.72 and jumped 41.1% in the past month.
Sportsman's Warehouse Holdings Inc. (SPWH - Free Report) is an outdoor sporting goods retailer in the United States. Its stores offer camping products, fishing products and hunting and shooting products. The company has an expected earnings growth rate of 63.8% for the current fiscal year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved 22.2% over the last 30 days. The stock has a beta of 0.68 and climbed 26.7% in the past month.
ProQR Therapeutics N.V. (PRQR - Free Report) is a biopharmaceutical company that is engaged in the discovery and development of RNA-based therapeutics for the treatment of genetic disorders. The company has an expected earnings growth rate of 10.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13.1% over the last 30 days. The stock has a beta of 0.54 and rallied 22.7% in the past month.
Ooma Inc. (OOMA - Free Report) provides communications solutions and other connected services to small business, home and mobile users in the United States, Canada, and internationally. The company has an expected earnings growth rate of more than 100% for the current year (ending January 2021). The Zacks Consensus Estimate for next-year earnings has improved more than 100% over the last 30 days. The stock has a beta of 0.68 and surged 10.4% in the past month.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>