U.S. Markets close in 3 hrs 45 mins

5 Low-Beta Stocks to Help You Deal With Market Volatility

Nilanjan Banerjee

Most analysts seem to believe that only risky stocks fetch lucrative returns, ignoring the fact that those securities are rewarding only when the market is bullish.

We have thus chalked out an investment plan to show that even less risky stocks are worthwhile bets, if certain parameters are considered.

Meaning of Beta

Beta measures the volatility or risk of a particular asset in comparison 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 beta of 1, its price 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 instance, if the market offers a return of 20%, a stock with a beta of 3 will return an overwhelming 60%. Similarly, when the market slips 20%, the stock will sink 60%, which is beyond upsetting.

Screening Criteria:

We have taken beta between 0 and 0.6 as our prime criterion for screening stocks that are less volatile than the market. But this should not be the only factor to be considered while picking a winning strategy. We need to take other parameters into account 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 past 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.

Here are five of the 14 stocks that qualified the screening:

Headquartered in Dallas, TX, Match Group, Inc. MTCH primarily offers dating products across the world. The company beat the Zacks Consensus Estimate in the prior four quarters, the average positive earnings surprise being 20.2%. For 2019 and 2020, the stock is likely to see earnings growth of 26% and 17.2%, respectively.

Headquartered in El Segundo, CA, Aerojet Rocketdyne Holdings, Inc. AJRD is a leading manufacturer of defense products in the domestic market. The company managed to surpass the Zacks Consensus Estimate in three of the past four quarters, the average positive earnings surprise being 36.7%. For 2019 and 2020, the stock has witnessed positive earnings estimate revision in the past 60 days.  

Banco Macro S.A. BMA, headquartered in Buenos Aires, Argentina, is a provider of services and products related to banking. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters. For 2019, the stock is likely to see earnings growth of 16.2%.

Headquartered in Fort Worth, TX, Hallmark Financial Services, Inc. HALL is a casualty insurance firm. The company beat the Zacks Consensus Estimate in the prior four quarters, the average positive earnings surprise being 98.5%. Through 2019, the stock is expected to see earnings growth of 34%.

Headquartered in Washington, District of Columbia, FTI Consulting, Inc. FCN is a leading provider of services related to business advisory. The company beat the Zacks Consensus Estimate in the prior four quarters. Through 2019, the stock is likely to see earnings growth of 6%. 

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.


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
 
Match Group, Inc. (MTCH) : Free Stock Analysis Report
 
Aerojet Rocketdyne Holdings, Inc. (AJRD) : Free Stock Analysis Report
 
Macro Bank Inc. (BMA) : Free Stock Analysis Report
 
Hallmark Financial Services, Inc. (HALL) : Free Stock Analysis Report
 
FTI Consulting, Inc. (FCN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research