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Navigate Market Turbulence With These 4 Low-Beta Stocks
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Investors remain concerned that the central bank may maintain the interest rate at a restrictive level for an extended period, potentially impeding the economic growth of the domestic market. Thus, uncertainty is grappling the market, underscoring 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 13 stocks that qualified for the screening:
Erie Indemnity has witnessed a rise in management fee revenue from policy issuance and renewal services. Increasing management fee revenue from administrative services is also aiding Erie Indemnity. Further, compared to the composite stocks belonging to the industry, the company has a much stronger balance sheet.
TreeHouse Foods is a prominent company in North America that specializes in producing private-label snack and beverage products. Private brands, also known as store brands, are products manufactured by one company but sold under another company's brand, often the retailer's brand. TreeHouse Foods manufactures a wide range of these products, which various retailers then sell under their own labels. This makes TreeHouse Foods a significant player in the private-label food and beverage market, providing products that cater to diverse consumer preferences and needs.
HII, a leading defense provider with a global presence, is benefiting from the strong performance of its Mission Technologies and Newport News Shipbuilding business units. In light of this, management has raised the revenue guidance for Mission Technologies for the current year.
ADMA Biologics has an innovative business model whose versatility and strength will continue to aid both the top and bottom lines this year and in 2025. The company is focusing on several growth strategies for the rest of this year. These strategies include improving the methods used to produce biologics, increasing the production output of these biologics and advancing the development of its early-stage research programs.
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
Navigate Market Turbulence With These 4 Low-Beta Stocks
Investors remain concerned that the central bank may maintain the interest rate at a restrictive level for an extended period, potentially impeding the economic growth of the domestic market. Thus, uncertainty is grappling the market, underscoring 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 Erie Indemnity Company (ERIE - Free Report) , TreeHouse Foods Inc (THS - Free Report) , HII (HII - Free Report) and ADMA Biologics Inc (ADMA - 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 13 stocks that qualified for the screening:
Erie Indemnity has witnessed a rise in management fee revenue from policy issuance and renewal services. Increasing management fee revenue from administrative services is also aiding Erie Indemnity. Further, compared to the composite stocks belonging to the industry, the company has a much stronger balance sheet.
TreeHouse Foods is a prominent company in North America that specializes in producing private-label snack and beverage products. Private brands, also known as store brands, are products manufactured by one company but sold under another company's brand, often the retailer's brand. TreeHouse Foods manufactures a wide range of these products, which various retailers then sell under their own labels. This makes TreeHouse Foods a significant player in the private-label food and beverage market, providing products that cater to diverse consumer preferences and needs.
HII, a leading defense provider with a global presence, is benefiting from the strong performance of its Mission Technologies and Newport News Shipbuilding business units. In light of this, management has raised the revenue guidance for Mission Technologies for the current year.
ADMA Biologics has an innovative business model whose versatility and strength will continue to aid both the top and bottom lines this year and in 2025. The company is focusing on several growth strategies for the rest of this year. These strategies include improving the methods used to produce biologics, increasing the production output of these biologics and advancing the development of its early-stage research programs.
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.