Big tech players have been providing impetus to the stock market since people are mostly working remotely amid the coronavirus pandemic. However, the market remains choppy as investors are fretting over another wave of the virus. Hence, it is of utmost importance to create a portfolio of low-beta securities as such stocks not only deliver healthy returns but also provide protection against market volatility.
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. 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 (Strong Buy) stocks here.
Here are five of the seven stocks that qualified the screening:
Headquartered in El Segundo, CA, Stamps (NASDAQ:STMP).com Inc. STMP primarily provides solutions related to shipping through the Internet. The company surpassed the Zacks Consensus Estimate in all the prior four quarters, the average earnings surprise being 111.7%. Also, the Zacks Consensus Estimate for 2020 and 2021 earnings has been revised upward over the last 60 days.
QIAGEN N.V. QGEN is in focus on its progress in antibody and antigen tests for SARS-CoV-2. Importantly, in less than 15 minutes, the company’s rapid portable test, likely to be launched in the December quarter of 2020, will be able to detect SARS-CoV-2 antigens in persons with active infections. In 2020 and 2021, the stock is likely to see earnings growth of 45.5% and 18.1%, respectively.
Owens & Minor (NYSE:OMI) Inc. OMI, headquartered in Richmond, VA, is a leading healthcare solutions company. In 2020 and 2021, the stock is likely to see earnings growth of 226.8% and 12.3%, respectively. Moreover, in the past 30 days, the stock has witnessed upward earnings estimate revision for 2020 and 2021, respectively.
Flowers Foods (NYSE:FLO), Inc. FLO, headquartered in Thomasville, GA, is a leading producer of packaged bakery products. In 2020, the stock is likely to see earnings growth of 27.1%.
Lakeland Industries (NASDAQ:LAKE), Inc. LAKE is primarily involved in manufacturing protective garments to protect people from hazardous chemicals, fire and diseases. In fiscal 2021, the stock is likely to see earnings growth of 631.1%.
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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Owens Minor, Inc. (OMI): Free Stock Analysis Report
QIAGEN N.V. (QGEN): Free Stock Analysis Report
Flowers Foods, Inc. (FLO): Free Stock Analysis Report
Lakeland Industries, Inc. (LAKE): Free Stock Analysis Report
Stamps.com Inc. (STMP): Free Stock Analysis Report
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