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3 Low-Beta Stocks to Ease Jitters From Market Volatility

Zacks

Most investors believe that risky stocks are the only ways to lucrative returns. The strategy works well in a bullish market, but the scenario will be different when the market walks on the bearish path.

Through intensive research we found out that low-risk stocks could also reward investors with handsome returns if some parameters are considered.

Beta Understanding

Beta measures the volatility or risk of a particular asset in comparison 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. But 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 one 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.

Here are three stocks that qualified the screening:

Headquartered in Nashville, TN, HCA Healthcare, Inc. HCA is a leading provider of services related to healthcare both in the U.K. and the United States. The company posted an average positive earnings surprise of 2.2% for the prior four quarters. For 2018 and 2019, we are expecting the company to witness year-over-year earnings growth of 32.2% and 7.7%, respectively.

Cimpress N.V. CMPR is an online supplier of high-quality graphic design services and customized printed products to small businesses and consumers. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 65.2%. For fiscal 2018 and 2019, Cimpress will likely report earnings growth of 256.7% and 51.3%, respectively.

Headquartered in New York, Virtu Financial, Inc. VIRT through its platform provides quotations for currencies and equities to traders. For 2018, we expect the company to witness earnings growth of 165.3%.

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.

Click here to sign up for a free trial to the Research Wizard today.

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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