5 Low Beta Stocks For Investors Who Hate Market Volatility

"An investment in knowledge pays the best interest." -- Benjamin Franklin.

The only thing that can fetch rewards from an investment is proper research and analysis. Hence, proper knowledge in the investment field is the key to success.

It is not like that, investing only in risky assets will bring more returns than the market. Many strategies can be built for investing in low risk portfolios that could end up with a lucrative outcome.

Since risky securities give below-average returns when the market is walking on the bearish path, we think building up a portfolio of low beta stocks would be a better way if some other parameters are considered.

What is Beta?

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.You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are five of the 13 stocks that qualified the screening:

Headquartered in Victor, NY Constellation Brands Inc. (NYSE:STZ) is the producer, importer and marketer of beer, wine, and spirits in the U.S., Canada, Mexico, New Zealand and Italy. The company beat the Zacks Consensus Estimate in each of the prior four quarters with an average positive earnings surprise of 7.65%.

Ollie's Bargain Outlet Holdings Inc. (NASDAQ:OLLI) – headquartered in Harrisburg, PA – primarily provides food products, housewares, books and stationery products. Over the last four quarters, the company surpassed the Zacks Consensus Estimate for earnings at an average rate of 16.80%. Moreover, for the current year, we are expecting the company to witness year-over-year earnings growth of 17.9%.

Headquartered in Southport, CT Sturm, Ruger & Company Inc. (NYSE:RGR) is the designer and manufacturer of firearms under the Ruger trademark in the U.S. Over the prior 60 days, the Zacks Consensus Estimate for current quarter earnings has been revised upward. Also, for the current year, the Zacks Consensus Estimate for earnings has been revised upward over the same time frame.

Ellington Financial LLC (NYSE:EFC) – based in Old Greenwich, CT – is mainly involved in the management of mortgage-related assets that comprise residential mortgage-backed securities. For the current year, we are expecting the company’s earnings to increase by 30.8%. On top of that, the Zacks Consensus Estimate for the current quarter has been revised upward.

Based in Freehold, N.J, Monmouth Real Estate Investment Corporation (NYSE:MNR) primarily leases assets to investment-grade tenants on long-term leases. Over the last four quarters, the company posted an average positive earnings surprise of 2.9%. Moreover, for the current year, the company’s earnings will likely increase 11.4%.

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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