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Bet on These 3 Low-Beta Stocks to Combat a Choppy Market
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Investors are concerned since measures to curb the spread of coronavirus in China and the prospects for additional interest rate increases could lead to slowdown in economic growth. These factors are making the market extremely volatile.
Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against volatile market conditions.
Beta Understanding
Beta measures the volatility or risk of a particular asset compared 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are three stocks among 10 that qualified the screening:
Chesapeake Energy Corporation is a leading oil and gas exploration and production player with a footprint in the prolific Marcellus, Haynesville and Eagle Ford shale plays.
In the past 30 days, Chesapeake Energy has witnessed upward earnings estimate revisions for 2022 and 2023, respectively. Investors like Chesapeake Energy since the company has a strong focus on reducing direct greenhouse gases and methane emissions.
HighPeak Energy, Inc. (HPK - Free Report) is a well-known name in the energy space. In the Midland Basin – a sub-basin of the prolific Permian basin – HighPeak Energy is engaged in exploiting oil and gas resources.
In the past 30 days, HighPeak Energy has witnessed upward earnings estimate revisions for 2022.
Landsea Homes Corporation (LSEA - Free Report) is primarily involved in building and designing master-planned communities and best-in-class homes. Through product differentiation, Landsea Homes has strengthened its unique brand position.
In the past seven days, Landsea Homes has witnessed upward estimate revisions for 2022 earnings per share.
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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Bet on These 3 Low-Beta Stocks to Combat a Choppy Market
Investors are concerned since measures to curb the spread of coronavirus in China and the prospects for additional interest rate increases could lead to slowdown in economic growth. These factors are making the market extremely volatile.
Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against volatile market conditions.
Beta Understanding
Beta measures the volatility or risk of a particular asset compared 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are three stocks among 10 that qualified the screening:
Chesapeake Energy Corporation is a leading oil and gas exploration and production player with a footprint in the prolific Marcellus, Haynesville and Eagle Ford shale plays.
In the past 30 days, Chesapeake Energy has witnessed upward earnings estimate revisions for 2022 and 2023, respectively. Investors like Chesapeake Energy since the company has a strong focus on reducing direct greenhouse gases and methane emissions.
HighPeak Energy, Inc. (HPK - Free Report) is a well-known name in the energy space. In the Midland Basin – a sub-basin of the prolific Permian basin – HighPeak Energy is engaged in exploiting oil and gas resources.
In the past 30 days, HighPeak Energy has witnessed upward earnings estimate revisions for 2022.
Landsea Homes Corporation (LSEA - Free Report) is primarily involved in building and designing master-planned communities and best-in-class homes. Through product differentiation, Landsea Homes has strengthened its unique brand position.
In the past seven days, Landsea Homes has witnessed upward estimate revisions for 2022 earnings per share.
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.