U.S. Markets open in 2 hrs 58 mins
  • S&P Futures

    4,004.50
    -2.75 (-0.07%)
     
  • Dow Futures

    32,634.00
    +3.00 (+0.01%)
     
  • Nasdaq Futures

    12,772.25
    -16.25 (-0.13%)
     
  • Russell 2000 Futures

    1,764.10
    -3.20 (-0.18%)
     
  • Crude Oil

    73.31
    +0.50 (+0.69%)
     
  • Gold

    1,956.50
    +2.70 (+0.14%)
     
  • Silver

    23.12
    -0.02 (-0.11%)
     
  • EUR/USD

    1.0831
    +0.0027 (+0.2491%)
     
  • 10-Yr Bond

    3.5280
    0.0000 (0.00%)
     
  • Vix

    20.93
    -0.81 (-3.73%)
     
  • GBP/USD

    1.2311
    +0.0029 (+0.2364%)
     
  • USD/JPY

    131.0190
    -0.5360 (-0.4074%)
     
  • BTC-USD

    26,783.49
    -1,104.66 (-3.96%)
     
  • CMC Crypto 200

    586.08
    -21.38 (-3.52%)
     
  • FTSE 100

    7,489.41
    +17.64 (+0.24%)
     
  • Nikkei 225

    27,518.25
    +41.38 (+0.15%)
     

4 Low-Beta Tech Stocks to Hedge Against a Volatile Market

After a turbulent 2022, the broader equity market has started 2023 on a decent note with all three major indexes in positive trajectory.

Major stock market indices in the United States like the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 have gained 15.8%, 7.3% and 6.6%, respectively, in the past three months. The Zacks Computer and Technology sector has risen 5.2% in the same time frame.

However, fears of recession still loom due to persistent macroeconomic and geopolitical issues. Consumers and enterprises have become more cautious about their IT spending due to inflationary pressure and rising interest rates. Tech sector, for which constraint supply-chain was a major issue till mid-2022, is now encountering the higher inventory level challenges due to softened IT spending.

Such challenges are likely to persist in the near term, affecting the price performances of most tech stocks. But the question is, should investors interested in tech stocks stay away from investing in the space?

We believe that investing in low-beta tech stocks like America Movil AMX, Model N MODN, Richardson Electronics RELL and eGain Corporation EGAN can aid investors in hedging against the current highly volatile market environment.

Beta measures a stock's systematic risk or volatility compared with the market. Therefore, a stock with a beta of less than 1.0 will be less sensitive to the market’s movements than a stock with a beta of more than 1.0.

Picking the Right Low-Beta Stocks

We have run the Zacks Stocks Screener to identify stocks with a beta between 0.40 and 0.86. We have narrowed our search by considering stocks with a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Picks

Richardson Electronics is a global provider of engineered solutions, serving the radio frequency, wireless and power conversion, electron device, security, and display systems markets. RELL delivers engineered solutions through product manufacturing, systems integration, prototype design and manufacture, testing and logistics.

Currently, the company sports a Zacks Rank #1. Richardson Electronics has a beta of 0.83. Shares of RELL have gained 9.19% in the past three months.

Richardson Electronics, Ltd. Price and Consensus

Richardson Electronics, Ltd. Price and Consensus
Richardson Electronics, Ltd. Price and Consensus

Richardson Electronics, Ltd. price-consensus-chart | Richardson Electronics, Ltd. Quote

The long-term expected earnings growth rate for Richardson Electronics is pegged at 20%. The Zacks Consensus Estimate for RELL’s fiscal 2023 earnings is pegged at $1.58 per share, implying an increase of 54.9% from the year-ago reported figure. For fiscal 2024, the consensus mark for earnings has been revised upward to $1.76 per share over the past 30 days, indicating an 11.4% year-over-year rise.

America Movil is a leading provider of integrated telecommunications services in Latin America. It offers enhanced communications solutions with higher data speed transmissions in 25 countries in Latin America, the United States, and Central and Eastern Europe. The company is gaining from an increasing broadband client base and wireless subscriber additions, especially in Brazil, Mexico and Columbia.

This Zacks Rank #2 company has a beta of 0.86. Shares of AMX have jumped 25.4% in the trailing 3-month period.

America Movil, S.A.B. de C.V. Price and Consensus

America Movil, S.A.B. de C.V. Price and Consensus
America Movil, S.A.B. de C.V. Price and Consensus

America Movil, S.A.B. de C.V. price-consensus-chart | America Movil, S.A.B. de C.V. Quote

America Movil aims to grow in other parts of the world by continuing to expand its subscriber base through the development of existing businesses and strategic acquisitions. It witnessed a surge in revenues from the Services segment due to the realized synergies from the buyout of Brazil’s Oi in April 2022. Its efforts to increase shareholder value, and lower debt and comprehensive financing costs by selling off cellular towers to Sitios Latino-america bode well for the long term. In third-quarter 2022, the company gained 2.9 million wireless subscribers on an organic basis, including 1.9 million post-paid subscribers. The company also witnessed a 1 million increase in net prepaid subscribers.

The consensus mark for AMX’s 2022 earnings has been pegged at $1.27 per share over the past seven days, indicating a 24.5% year-over-year increase. For 2023, the Zacks Consensus Estimate for earnings stands at $1.38 per share for the past seven days, indicating year-over-year growth of 9.1%.

eGain is the leading provider of cloud customer engagement hub software. With a presence in North America, EMEA and APAC, the company offers web customer interaction applications, social customer interaction applications and contact center applications.

Currently, eGain has a Zacks Rank #2. It has a beta of 0.40. Shares of EGAN have climbed 32.3% in the past three months.

eGain Corporation Price and Consensus

eGain Corporation Price and Consensus
eGain Corporation Price and Consensus

eGain Corporation price-consensus-chart | eGain Corporation Quote

eGain solutions help improve customer experience, optimize service processes and boost sales across the web, social and phone channels. Hundreds of the world's largest companies rely on eGain to transform their fragmented sales engagement and customer service operations into unified Customer Engagement Hubs. In the latest quarter, the company’s Knowledge Hub solution was adopted by some major global clients, which include a leading global airline, a U.S.-based health & benefit service provider and the Department of Taxation of one of the U.S. state governments.

The Zacks Consensus Estimate for EGAN’s fiscal 2023 earnings is pegged at 19 cents, remaining steady over the past 60 days. The consensus mark for fiscal 2024 earnings has also remained steady over the past 60 days at 37 cents, suggesting a whopping 94.7% year-on-year surge.

Model N provides revenue management solutions for life sciences and technology companies, including applications for configure, price, quote, rebates management and regulatory compliance. Based in San Mateo, CA, the company has a significant growth opportunity in the revenue management market as it continues to replace legacy processes that were labor-intensive, error-prone, inflexible and costly.

This Zacks Rank #2 company has a beta of 0.60. Shares of MODN have increased 22% in the past three months.

Model N, Inc. Price and Consensus

Model N, Inc. Price and Consensus
Model N, Inc. Price and Consensus

Model N, Inc. price-consensus-chart | Model N, Inc. Quote

Currently, Model N is making steady progress in its transformation to a Software-as-a-Service (SaaS) based model. The company strengthened its foothold by closing multiple SaaS transactions and witnessed strong contributions from subscription booking. It manages client revenues worth billions for over 49,000 enterprises across 100 countries. Its solid go-to-market strategy, new logo additions and robust sales execution are driving top-line growth.

The consensus mark for MODN’s fiscal 2023 earnings has been revised upward to 93 cents per share from 86 cents over the past 60 days, calling for a 29.2% year-over-year rise. For fiscal 2024, the Zacks Consensus Estimate for earnings has increased by 2 cents to 97 cents per share over the past 60 days, forecasting year-over-year growth of 4.3%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

America Movil, S.A.B. de C.V. (AMX) : Free Stock Analysis Report

Richardson Electronics, Ltd. (RELL) : Free Stock Analysis Report

eGain Corporation (EGAN) : Free Stock Analysis Report

Model N, Inc. (MODN) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research