Yahoo Finance Navigate Market Turbulence With These 3 Low-Beta Stocks
Many investors anticipate a rate cut later this year, believing that inflation is showing signs of easing. However, U.S. Federal Reserve Governor Michelle Bowman has indicated that since inflation remains high, a rate cut is not justified. Consequently, volatility and uncertainty are likely to continue in the stock market. This underscores the crucial need to construct a portfolio of low-beta stocks, which are expected to provide robust returns while mitigating the impact of market volatility.
In this regard, stocks like ARKO Corp. ARKO, Sprouts Farmers Market Inc. SFM and MS&AD Insurance Group Holdings Inc MSADY 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here are three stocks that qualified for the screening:
Increasing engagement of customers and solid comparable store sales are aiding Sprouts Farmers Market. The company's board of directors has approved a new $600 million share repurchase program, reflecting its robust cash flow generation.
ARKO ranks among the leading convenience store operators in the United States and holds the firm conviction that its current market valuation does not accurately represent the true value of its underlying business.
MS&AD Insurance Group, a prominent global insurance and financial services provider, is strategically transforming its business portfolio to reduce dependence on domestic non-life insurance. The company is actively expanding its international operations and domestic life insurance segments to achieve greater diversification and growth.
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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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Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report
MS&AD Insurance Group Holdings Inc. (MSADY) : Free Stock Analysis Report
ARKO Corp. (ARKO) : Free Stock Analysis Report
