Zacks Investment Ideas feature highlights: GameStop, Tesla, Hershey, Yum China and Box
For Immediate Release
Chicago, IL – February 23, 2023 – Today, Zacks Investment Ideas feature highlights GameStop Corp GME, Tesla TSLA, Hershey HSY, Yum China YUMC and Box Inc. BOX.
Low Beta, High Performance: 3 Stocks to Watch
Beta: A Volatility Measuring Tool
In the context of Wall Street, beta is a gauge of a stock's movement or volatility compared to the general market – typically the S&P 500 Index. Beta measures the magnitude to which a stock fluctuates versus the fluctuations of the major market indices.
How Does It Work?
A beta of 1.0 means that a stock hypothetically has the same magnitude of movement as the overall market. A beta higher than 1.0 means the stock is more volatile than the market. For example, a beta of 1.20 would suggest that the underlying equity moves about 20% more than the S&P 500 Index. Examples of high beta stocks include GameStop Corp – which regularly see moves of 10% or more in each direction.
Generally, low beta stocks can be optimal for investors because they provide less wild swings, and ultimately less risk – all else being equal. On the contrary, some degree of beta is needed within a portfolio to achieve higher returns. Remember, no risk, no returns. Another example of a high beta stock would be Tesla. Tesla has a beta of 1.74, meaning it tends to move 74% more than the market.
As an investor, it is best to find the mix that works for you best. There is no "one size fits all" solution, and often the best portfolios have a mix between both high and low beta stocks. Through this counterbalance, investors can benefit by outperforming on up days, but also surviving downswings in the major indices.
3 Low Beta Stocks to Consider
1. Zacks #1 Rank (Strong Buy) stock Hershey has much going for it. North America's largest chocolate maker is not only trading steady; the stock is nearing new highs amidst a volatile market. Over the past year, Hershey is higher by 21.10% versus -5% returns in the S&P 500 Index.
Hershey has more attributes than strong price performance and a low beta. HSY pays a juicy 1.72% dividend, has strong earnings expectations moving forward, and has smashed earnings estimates for eleven straight quarters.
2. Yum China holds a Zacks Rank of 2 (Buy). The company owns and franchises restaurants in China, such as KFC, Pizza Hut, and Taco Bell. Yum China is the definition of a steady performer. Despite strict lockdowns and a volatile Chinese equity market, the stock has been a serial steady outperformer. For example, yesterday, when many Chinese stocks got crushed, YUMC was flat.
Investors should continue to ride the stock as long as it stays above its 50-day moving average.
3. Zacks Rank #3 Box Inc. is a cloud-based software platform operator. Box grew EPS at a 41% clip last quarter and while most software stocks are in the gutter, BOX is approaching new all-time highs and is showing relative strength. Unlike the previous two stocks we mentioned above, Box offers investors in search of low beta a high-growth tech option.
Box is set to report earnings on March 3rd, and investors should expect a big break out should earnings beat expectations.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Hershey Company (The) (HSY) : Free Stock Analysis Report
GameStop Corp. (GME) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Box, Inc. (BOX) : Free Stock Analysis Report
Yum China (YUMC) : Free Stock Analysis Report
