Investing
Buy These 4 Low-Beta Stocks to Sail Through the Choppy Market
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The market will likely remain volatile since many investors believe that the job market, which is still strong, might convince Jerome Powell to keep interest rates higher for longer to tame inflation. Thus, investors are demanding portfolio protection from expected wild market swings. Hence, creating a portfolio of low-beta stocks is paramount since the securities will deliver healthy returns and shield against choppy market conditions.
In this regard, stocks like Trip.com Group Limited TCOM, Dr. Reddy’s Laboratories Limited RDY, J&J Snack Foods Corp. JJSF and Granite Ridge Resources, Inc. GRNT 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.
Here are four stocks among nine that qualified for the screening:
Trip.com Group Limited is well known for providing global travel services. Owing to the relaxation of travel restrictions, the global travel industry is recovering, which is aiding TCOM.
Dr. Reddy’s Laboratories has global operations in 74 countries. Analysts are bullish on RDY as its North American generic business and its emerging markets’ generic operations will likely continue to thrive.
J&J Snack Foods is a well-known name in the snack food industry. J&J Snack has continued to deliver profit momentum across all its business segments, thanks to the strategic initiatives that the company has undertaken over the past two years.
As a non-operated oil and gas exploration and production company, Granite Ridge has top-tier acreage across the Permian — the most prolific basin in the United States. Granite Ridge also has a strong portfolio of wells. Apart from the Permian, GRNT has exposure to another four key unconventional basins in the United States.
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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Dr. Reddy’s Laboratories Ltd (RDY): Free Stock Analysis Report
J & J Snack Foods Corp. (JJSF): Free Stock Analysis Report
Trip.com Group Limited Sponsored ADR (TCOM): Free Stock Analysis Report
Granite Ridge Resources, Inc. (GRNT): Free Stock Analysis Report
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