U.S. markets closed
  • S&P 500

    4,471.37
    +33.11 (+0.75%)
     
  • Dow 30

    35,294.76
    +382.20 (+1.09%)
     
  • Nasdaq

    14,897.34
    +73.91 (+0.50%)
     
  • Russell 2000

    2,265.65
    -8.52 (-0.37%)
     
  • Crude Oil

    82.66
    +1.35 (+1.66%)
     
  • Gold

    1,768.10
    -29.80 (-1.66%)
     
  • Silver

    23.35
    -0.13 (-0.54%)
     
  • EUR/USD

    1.1606
    +0.0005 (+0.05%)
     
  • 10-Yr Bond

    1.5760
    +0.0570 (+3.75%)
     
  • GBP/USD

    1.3751
    +0.0074 (+0.54%)
     
  • USD/JPY

    114.2000
    +0.5230 (+0.46%)
     
  • BTC-USD

    61,455.21
    +1,999.60 (+3.36%)
     
  • CMC Crypto 200

    1,464.06
    +57.32 (+4.07%)
     
  • FTSE 100

    7,234.03
    +26.32 (+0.37%)
     
  • Nikkei 225

    29,068.63
    +517.70 (+1.81%)
     

Bet on These 5 Low-Beta Stocks to Combat Market Volatility

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Strong corporate earnings and economic recovery have helped the stock market rally over the past few weeks. With new variants of coronavirus spreading rapidly across the country, analysts are getting concerned that the pace of economic recovery may slow down. This makes the market volatile. 

Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will not only deliver healthy returns but also provide a shield against choppy market conditions.

What is 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, 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 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 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 as well 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 five of the eight stocks that qualified the screening:

Regeneron Pharmaceuticals Inc. REGN is primarily engaged in inventing life-transforming medicines that treat people suffering from serious diseases. The leading biotechnology company has witnessed upward earnings estimate revisions for 2021 and 2022 over the past 30 days.

Canon Inc. CAJ is a leading seller of office multifunction devices, laser and inkjet printers and lithography equipment. Over the past 30 days, the stock has witnessed upward earnings estimate revisions for 2021 and 2022, respectively.

Cabot Oil & Gas Corporation COG is a leading producer of natural gas, having footprint in onshore U.S. resources. Being a leading producer of gas, the company helps to reduce emissions of greenhouse gases. In 2021 and 2022, the stock is likely to see earnings growth of 220.4% and 16.9%, respectively.

Exelon Corporation EXC is primarily involved in delivering electricity and natural gas to millions of customers in several states. For 2021 and 2022, the stock has witnessed upward earnings estimate revisions over the past 30 days.

Walmart Inc. WMT is the largest retailer in the world. With its huge brand recognition, the company has every possibility of growing its e-commerce business. In fiscal 2022, the stock is likely to see earnings growth of 15.5%.

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
 
Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
 
Exelon Corporation (EXC) : Free Stock Analysis Report
 
Cabot Oil & Gas Corporation (COG) : Free Stock Analysis Report
 
Walmart Inc. (WMT) : Free Stock Analysis Report
 
Canon, Inc. (CAJ) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research