Buy These 4 Low-Beta Stocks to Counter the Choppy Market
Investors are liking comments from several U.S. central bank officials that it will probably not take long for the current cycle of monetary policy tightening to end. Despite this positivity, projections of a gloomy second-quarter earnings season are making the broader market extremely volatile. Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and shield against choppy market conditions.
In this regard, stocks like Kimberly-Clark Corporation KMB,MINISO Group Holding Limited MNSO, Arcosa Inc. ACA and RLI Corp. RLI 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 stocks among 10 that qualified for the screening:
Kimberly-Clark is a well-known manufacturer of personal care and consumer tissue products across the globe. It has been in business for more than 150 years, and as significant as 25% of the global population uses any of its products daily. With a strong effort to safeguard the planet, KMB is making innovations for more sustainable products.
MINISO Group Holding is a leading retailer and wholesaler of lifestyle products. MINISO Group believes that in 2023, it will be able to open more than 250 to 350 stores (its original goal) in China. This could be possible, thanks to a bullish business outlook from its retail partners.
Arcosa has a strong geographic footprint and a well-diversified portfolio and solutions that could support infrastructure growth. Arcosa is also leading the market when it comes to the products that are key to transportation infrastructure.
RLI Corp. is a well-known name with deep underwriting expertise. RLI boasts that it has been delivering underwriting profits for 27 successive years.
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.
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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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RLI Corp. (RLI) : Free Stock Analysis Report
Kimberly-Clark Corporation (KMB) : Free Stock Analysis Report
Arcosa, Inc. (ACA) : Free Stock Analysis Report
MINISO Group Holding Limited Unsponsored ADR (MNSO) : Free Stock Analysis Report
