Navigate Through Market Volatility With These 4 Low-Beta Stocks
Investors worry that the markets might be in trouble with the Federal Reserve likely to tighten the monetary policy rapidly. Although most of the S&P 500 companies that have reported earnings so far have beaten the Zacks Consensus Estimate, negative headlines like inflation and the Russia-Ukraine conflict have made the market extremely volatile and it will possibly continue to be choppy, at least in the near term.
Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against volatile market conditions.
Beta Understanding
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 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 four stocks that qualified the screening:
Transportadora de Gas del Sur SA’s TGS midstream asset portfolio has the most extensive natural gas pipeline network in Latin America. Transportadora de Gas del Sur generates stable fee-based revenues since its pipeline assets transport more than 60% of the gas consumed in Argentina.
Transportadora de Gas del Sur has witnessed upward estimate revisions for its 2022 bottom line in the past 60 days. The upward revisions are backed by TGS’ stable business model and strong focus on creating differential value for shareholders. Also, Transportadora de Gas del Sur has lower debt exposure than the composite stocks belonging to the industry.
On the basis of annual sales, The Kroger Co. KR is among the leading retailers in the United States. The Kroger is a well-known supermarket company, operating an economical three-tier distribution system.
For fiscal 2022, The Kroger has witnessed upward earnings estimate revisions in the past 30 days. KR is expecting momentum in its business to continue this year and has boosted its capability to adapt to the operating environment that is changing rapidly.
OP Bancorp OPBK has a solid business model and serves the banking needs of professionals and businesses with small and medium-sized operations.
In 2022 and 2023, OP Bancorp is likely to see earnings growth of 18.1% and 3.6%, respectively. Year to date, OP Bancorp has gained 7.6% compared with the industry’s 4.8% rally.
Telecom Argentina S.A. TEO is a well-known name since it is a leading provider of telecommunications services in Argentina and internationally. Telecom Argentina has been investing that will enable it to provide high-speed mobile connectivity.
For 2022 and 2023, Telecom Argentina has witnessed upward estimate revisions for its bottom line in the past 30 days.
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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The Kroger Co. (KR) : Free Stock Analysis Report
Telecom Argentina Stet France Telecom S.A. (TEO) : Free Stock Analysis Report
Transportadora De Gas Sa Ord B (TGS) : Free Stock Analysis Report
OP Bancorp (OPBK) : Free Stock Analysis Report
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