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Buy These 4 Low-Beta Stocks to Counter Market Volatility
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Investors are waiting for the inflation data to determine the Federal Reserve's interest rate outlook. Thus, the market will remain volatile, calling for an urgency to create a portfolio of low-beta stocks as the securities will deliver healthy returns and shield against choppy market conditions.
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 a 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 a 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 a 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 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 four of 11 stocks that qualified for the screening:
As a non-operated oil and gas exploration and production company, Granite Ridge has top-tier acreage across the Permian — the most prolific basin in the United States. Granite Ridge also has a strong portfolio of wells. Apart from the Permian, GRNT has exposure to another four key unconventional basins in the United States.,
Otter Tail Corporation is a leading player in electric utility and manufacturing businesses. Recovery of rate base investments continues to drive the firm. For 2023 and 2024, Otter Tail has witnessed upward earnings estimate revisions in the past 60 days.
Vipshop Holdings is a well-known provider of premium and popular branded products. VIPS provides products to customers in China at a considerable discount on retail prices. Over the past 60 days, Vipshop Holdings has witnessed upward earnings estimate revisions for 2023.
Huron is being aided by solid organic growth in each of its operating segments. The top line of the global professional services firm is continually being favored by rising demand for consulting and managed services and digital capabilities.
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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Buy These 4 Low-Beta Stocks to Counter Market Volatility
Investors are waiting for the inflation data to determine the Federal Reserve's interest rate outlook. Thus, the market will remain volatile, calling for an urgency to create a portfolio of low-beta stocks as the securities will deliver healthy returns and shield against choppy market conditions.
In this regard, stocks like Granite Ridge Resources, Inc. (GRNT - Free Report) , Otter Tail Corporation (OTTR - Free Report) , Vipshop Holdings Limited (VIPS - Free Report) and Huron (HURN - Free Report) are worth betting on.
Understanding Beta
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 a 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 a 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 a 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 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 four of 11 stocks that qualified for the screening:
As a non-operated oil and gas exploration and production company, Granite Ridge has top-tier acreage across the Permian — the most prolific basin in the United States. Granite Ridge also has a strong portfolio of wells. Apart from the Permian, GRNT has exposure to another four key unconventional basins in the United States.,
Otter Tail Corporation is a leading player in electric utility and manufacturing businesses. Recovery of rate base investments continues to drive the firm. For 2023 and 2024, Otter Tail has witnessed upward earnings estimate revisions in the past 60 days.
Vipshop Holdings is a well-known provider of premium and popular branded products. VIPS provides products to customers in China at a considerable discount on retail prices. Over the past 60 days, Vipshop Holdings has witnessed upward earnings estimate revisions for 2023.
Huron is being aided by solid organic growth in each of its operating segments. The top line of the global professional services firm is continually being favored by rising demand for consulting and managed services and digital capabilities.
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.