Buy 5 Low Beta Stocks To Withstand A Volatile Market

Stocks with high risk will outperform the market when there is a bull run. But these securities can slide when the tide is moving in the opposite direction.

Risk-averse investors will obviously stay away from such stocks when the market is cloudy. With intensive research we have created a strategy that allows investors to spend money on securities with lower risk yet lucrative returns.

Meaning of 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.

Here are five of the 15 stocks that qualified the screening:

Based in Santiago, Chile, Compañía Cervecerías Unidas SA (NYSE:CCU) is a producer and seller of both alcoholic and non-alcoholic beer. For 2017, the company is expected to witness year-over-year earnings growth of almost 29%. Also, over the last 30 days, the Zacks Consensus Estimate for earnings for the firm’s April to June quarter has been revised upward.

Headquartered in Greenwood Village, CO Red Robin Gourmet Burgers Inc. (NASDAQ:RRGB) is the operator of both fast-casual and casual dining restaurants in the U.S. and Canada. The company beat the Zacks Consensus Estimate in two of the prior four quarters, with an average positive earnings surprise of 17.27%. Moreover, for 2017, the Zacks Consensus Estimate for earnings has been revised upward over the last 30 days.

The business of Aaron's, Inc. (NYSE:AAN) comprises specialty retailing of office and residential furniture. The firm managed to surpass the Zacks Consensus Estimate in all the prior four quarters with an average earnings beat of 10.55%. Also, Aaron's will likely see year-over-year earnings growth of almost 5%.

LG Display Co. Ltd. (NYSE:LPL) − headquartered in Seoul, South Korea − is the seller of thin-film transistor liquid crystal display panels all over the world. For 2017, the Zacks Consensus Estimate for earnings has been revised upward in the last 60 days. Also, the company’s earnings will likely grow almost 85% during 2017.

Headquartered in San Carlos, CA, TiVo Corporation (NASDAQ:TIVO) is a provider of services like digital home entertainment. The company delivered an average positive earnings surprise of 67.56% in the prior four quarters. On top of that, for the current year, the Zacks Consensus Estimate for earnings has been revised upward over a period of 60 days.

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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