We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Low-Beta Stocks to Beat Coronavirus-Induced Volatility
Read MoreHide Full Article
Markets are extremely volatile as the large but opposing forces of gradual economic recovery and the new wave of coronavirus infections keep investors on the edge. Hence, it is of utmost importance to create a portfolio of low-beta securities since such stocks not only deliver healthy returns but also provide a shield against market volatility.
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. However, this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters as well 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 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 10 stocks that qualified the screening:
BJ’s Wholesale Club Holdings, Inc. (BJ - Free Report) : BJ’s Wholesale is an operator of membership warehouse clubs, primarily in the U.S. East Coast. Sporting a VGM Score of A, this Westborough, MA-headquartered company’s expected EPS growth rate for the next five years is 13.5%, which compares favorably with the industry's 12.3%.
Eli Lilly and Company (LLY - Free Report) , headquartered in Indianapolis, IN, is a leading manufacturer of pharmaceutical products. The stock is likely to see earnings growth of 12.9% and 15.8% in 2020 and 2021, respectively.
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 35.2% in 2020.
Based in Cincinnati, OH, The Kroger Co. (KR - Free Report) is a leading retailer in the domestic market. For fiscal 2021, the stock is likely to see earnings growth of 29.1%. Also, in three of the past four quarters, the company beat the Zacks Consensus Estimate.
Headquartered in Burlington, MA, Everbridge Inc. is a leading software company. The stock is likely to see bottom-line growth of 14.3% and 159.4% in 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
5 Low-Beta Stocks to Beat Coronavirus-Induced Volatility
Markets are extremely volatile as the large but opposing forces of gradual economic recovery and the new wave of coronavirus infections keep investors on the edge. Hence, it is of utmost importance to create a portfolio of low-beta securities since such stocks not only deliver healthy returns but also provide a shield against market volatility.
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. However, this should not be the only factor to be considered while selecting a winning strategy. We need to take into account other parameters as well 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 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 10 stocks that qualified the screening:
BJ’s Wholesale Club Holdings, Inc. (BJ - Free Report) : BJ’s Wholesale is an operator of membership warehouse clubs, primarily in the U.S. East Coast. Sporting a VGM Score of A, this Westborough, MA-headquartered company’s expected EPS growth rate for the next five years is 13.5%, which compares favorably with the industry's 12.3%.
Eli Lilly and Company (LLY - Free Report) , headquartered in Indianapolis, IN, is a leading manufacturer of pharmaceutical products. The stock is likely to see earnings growth of 12.9% and 15.8% in 2020 and 2021, respectively.
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 35.2% in 2020.
Based in Cincinnati, OH, The Kroger Co. (KR - Free Report) is a leading retailer in the domestic market. For fiscal 2021, the stock is likely to see earnings growth of 29.1%. Also, in three of the past four quarters, the company beat the Zacks Consensus Estimate.
Headquartered in Burlington, MA, Everbridge Inc. is a leading software company. The stock is likely to see bottom-line growth of 14.3% and 159.4% in 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.