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Navigate Market Turbulence With These 4 Low-Beta Stocks
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From late May through early July, economic activity in the United States experienced slight to modest growth, according to the Federal Reserve's Beige Book. However, businesses are expecting slower growth in the coming months and have reported indications of a softening job market, per the Fed's recent survey release. Consequently, volatility and uncertainty are likely to continue in the stock market. This underscores the crucial need to construct a portfolio of low-beta stocks, which are expected to provide robust returns while mitigating the impact of market volatility.
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 among 11 stocks that qualified for the screening:
As a leading pure-play LNG carrier, Cool Company is strategically positioned to take advantage of the growing demand for natural gas, a cleaner-burning transition fuel. Cool Company boasts a stable business model, underpinned by its service to industry-leading customers with a growing fleet of state-of-the-art LNG carriers. The company has secured a robust total revenue backlog of $1.9 billion, with an average charter term of five years, ensuring long-term revenue visibility and stability.
Corcept Therapeutics has established a stable business model through the development and discovery of treatments for severe endocrinologic, oncologic, metabolic and neurologic disorders. The company is experiencing significant benefits from a record number of patients receiving Korlym, contributing to its robust financial performance and growth prospects.
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.
JOYY, a leading global technology company, is seeing significant benefits from increasing non-live streaming revenues and a growing number of paying users on its platform, BIGO. The company's focus on cost discipline and efficiency improvements is further enhancing its profitability.
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
From late May through early July, economic activity in the United States experienced slight to modest growth, according to the Federal Reserve's Beige Book. However, businesses are expecting slower growth in the coming months and have reported indications of a softening job market, per the Fed's recent survey release. Consequently, volatility and uncertainty are likely to continue in the stock market. This underscores the crucial need to construct a portfolio of low-beta stocks, which are expected to provide robust returns while mitigating the impact of market volatility.
In this regard, stocks like Cool Company Ltd (CLCO - Free Report) , Corcept Therapeutics Incorporated (CORT - Free Report) , TXO Partners LP (TXO - Free Report) , and JOYY Inc (YY - 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 among 11 stocks that qualified for the screening:
As a leading pure-play LNG carrier, Cool Company is strategically positioned to take advantage of the growing demand for natural gas, a cleaner-burning transition fuel. Cool Company boasts a stable business model, underpinned by its service to industry-leading customers with a growing fleet of state-of-the-art LNG carriers. The company has secured a robust total revenue backlog of $1.9 billion, with an average charter term of five years, ensuring long-term revenue visibility and stability.
Corcept Therapeutics has established a stable business model through the development and discovery of treatments for severe endocrinologic, oncologic, metabolic and neurologic disorders. The company is experiencing significant benefits from a record number of patients receiving Korlym, contributing to its robust financial performance and growth prospects.
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.
JOYY, a leading global technology company, is seeing significant benefits from increasing non-live streaming revenues and a growing number of paying users on its platform, BIGO. The company's focus on cost discipline and efficiency improvements is further enhancing its profitability.
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.