Buy These 4 Low-Beta Stocks to Counter Market Volatility
U.S. economy’s blockbuster performance in the third quarter is signaling a robust labor market. This again is raising expectations that the Fed will tighten the monetary policy further to control inflation. Hence, the market will remain volatile, calling for an urgency to create a portfolio of low-beta stocks as the securities will deliver healthy returns and shield against choppy market conditions.
In this regard, stocks like Granite Ridge Resources Inc. GRNT, Ardmore Shipping Corporation ASC, McKesson Corporation MCK and Stride Inc. LRN 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 of the six stocks that qualified for the screening:
As a non-operated oil and gas exploration and production company, Granite Ridge has top-tier acreage across the Permian — the most prolific basin in the United States. Granite Ridge also has a strong portfolio of wells. Apart from the Permian, GRNT has exposure to another four key unconventional basins in the United States.
Ardmore Shipping is a well-known name in the industry for offering services through voyage charters and time charters. The stock exhibits a steady business model and places a significant emphasis on establishing enduring commercial partnerships with customers, all the while sustaining a cost advantage in its assets.
McKesson Corporation is a leading provider of diversified healthcare services. The company is strongly focused on returning capital to shareholders through share buybacks and juicy dividend payments.
Stride maintains a stable business model by revolutionizing the educational experiences of individuals through the utilization of innovative, high-quality, technology-enabled educational solutions.
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.
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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.
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McKesson Corporation (MCK) : Free Stock Analysis Report
Stride, Inc. (LRN) : Free Stock Analysis Report
Ardmore Shipping Corporation (ASC) : Free Stock Analysis Report
Granite Ridge Resources, Inc. (GRNT) : Free Stock Analysis Report
