Buy These 4 Low-Beta Stocks to Counter Market Volatility
Persistent inflationary pressure stemming from the rising cost of rental housing has been hindering the market rally. However, analysts are still expecting a rate cut this year. The combination of these factors is creating volatility in the market, prompting an urgent need to build a portfolio of low-beta stocks. These securities are projected to deliver solid returns while offering protection against unpredictable market conditions.
In this regard, stocks like The Progressive Corporation PGR, Booz Allen Hamilton Holding Corporation BAH, Trip.com Group Limited TCOM and Patria Investments Limited PAX 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 eight stocks that qualified for the screening:
In the domestic market, The Progressive Corporation is among the largest auto insurers. The company continues to bank on increasing net earned premiums and is expected to witness earnings growth of 45.3% this year.
Booz Allen Hamilton Holding is a leading provider of management and technology consulting, analytics, engineering and digital solutions. In the federal defense and civil markets, the company is witnessing excellent organic revenue growth.
Trip.com Group Limited is well known for providing global travel services. Owing to the relaxation of travel restrictions, the global travel industry has mostly recovered, which is aiding TCOM.
Patria Investments Limited is a well-known global alternative investment firm. Patria managed combined assets of $31.8 billion as of Dec 31, 2023, marking a 17% increase from the previous year’s $27.2 billion. It mainly focuses on Latin America.
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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The Progressive Corporation (PGR) : Free Stock Analysis Report
Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report
Trip.com Group Limited Sponsored ADR (TCOM) : Free Stock Analysis Report
Patria Investments Limited (PAX) : Free Stock Analysis Report
