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Navigate Market Turbulence With These 4 Low-Beta Stocks
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The Commerce Department's report indicated that there has been a downward revision in the annual pace of economic growth for the United States for the first quarter. Furthermore, there remains uncertainty regarding the timing of interest rate reductions by the central bank. As a result, volatility and uncertainty may persist in the stock market, emphasizing the critical importance of assembling a portfolio consisting of low-beta stocks. These securities are expected to deliver strong returns while offering protection against the unpredictability of market conditions.
In this regard, stocks like Barrick Gold Corporation (GOLD - Free Report) , Sprouts Farmers Market Inc. (SFM - Free Report) , TXO Partners LP (TXO - Free Report) and Vitesse Energy, Inc. (VTS - 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 the 12 stocks that qualified for the screening:
Vitesse Energy has non-operated working and mineral interest in oil and gas assets, mainly across the prolific Bakken in North Dakota. Having interests in 6,932 productive wells, Vitesse Energy has secured a solid production outlook, assuming that the crude pricing scenario will remain extremely favorable.
Barrick Gold stands as one of the leading gold producers in the United States. With an extensive portfolio encompassing both gold and copper operations, the company boasts a robust financial position, maintaining a net leverage close to zero.
Increasing engagement of customers and solid comparable store sales are aiding Sprouts Farmers Market. The company's board of directors has approved a new $600 million share repurchase program, reflecting its robust cash flow generation.
TXO Partners has a strong footprint in the oil-rich Permian – the most prolific basin in the United States. Being involved in exploration and production activities, the master limited partnership may continue to gain from a favorable commodity pricing environment.
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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Navigate Market Turbulence With These 4 Low-Beta Stocks
The Commerce Department's report indicated that there has been a downward revision in the annual pace of economic growth for the United States for the first quarter. Furthermore, there remains uncertainty regarding the timing of interest rate reductions by the central bank. As a result, volatility and uncertainty may persist in the stock market, emphasizing the critical importance of assembling a portfolio consisting of low-beta stocks. These securities are expected to deliver strong returns while offering protection against the unpredictability of market conditions.
In this regard, stocks like Barrick Gold Corporation (GOLD - Free Report) , Sprouts Farmers Market Inc. (SFM - Free Report) , TXO Partners LP (TXO - Free Report) and Vitesse Energy, Inc. (VTS - 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 the 12 stocks that qualified for the screening:
Vitesse Energy has non-operated working and mineral interest in oil and gas assets, mainly across the prolific Bakken in North Dakota. Having interests in 6,932 productive wells, Vitesse Energy has secured a solid production outlook, assuming that the crude pricing scenario will remain extremely favorable.
Barrick Gold stands as one of the leading gold producers in the United States. With an extensive portfolio encompassing both gold and copper operations, the company boasts a robust financial position, maintaining a net leverage close to zero.
Increasing engagement of customers and solid comparable store sales are aiding Sprouts Farmers Market. The company's board of directors has approved a new $600 million share repurchase program, reflecting its robust cash flow generation.
TXO Partners has a strong footprint in the oil-rich Permian – the most prolific basin in the United States. Being involved in exploration and production activities, the master limited partnership may continue to gain from a favorable commodity pricing environment.
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.