It is good news for the market that inflation is moderating. This is leading investors to wonder if the central bank could consider stopping increasing rates in the near future. However, there has been a cautious note from the Fed policymakers that even if there is an end to raising rates, the monetary policy will remain tight. This is making the market volatile. Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and shield against volatile market conditions. In this regard, stocks like Penumbra, Inc. (PEN – Free Report) , Patria Investments Limited (PAX – Free Report) , Lamb Weston Holdings, Inc. (LW – Free Report) and Conagra Brands Inc (CAG – Free Report) are worth betting on.
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.
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 stocks here.
Here are four stocks among nine that qualified for the screening:
Penumbra, headquartered in Alameda, CA, is among the leading healthcare players focusing on innovative therapies. Penumbra, having a global presence, primarily addresses challenging medical conditions through its broad portfolio of novel products.
Patria Investments Limited is a well-known name as a global alternative investment firm. Patria managed combined assets of $26.5 billion as of Sep 30, 2022. It mainly focuses on Latin America.
Lamb Weston Holdings Inc is also a well-known supplier of sweet potato, frozen potato, vegetable productsandappetizers. Lamb Weston supplies these products to retailers and restaurants across the globe and thereby secures steady cashflows.
Conagra Brands is a well-known branded food player in North America. Its management continuously focuses on key business priorities while keeping the balance sheet strong. Like good players in the space, CAG is focused on generating value for its stockholders.
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.
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.