5 High Beta ETFs, Stocks to Ride on Surging Market

After a May swoon, the Wall Street rebounded strongly, buoyed by high hopes of easing money policies. The Fed left interest rates unchanged in its latest FOMC meeting and hinted at future rate cuts to protect the economy from trade conflicts and other threats. In fact, the S&P 500 hit new highs at the close.

The central bank has dropped the word “patient”, promising to “closely monitor the implications of incoming information for the economic outlook.” Fed also stated that it would "act as appropriate to sustain the expansion” because "uncertainties" have increased (read: Best June for Stocks in Decades: 5 Best ETFs).

Additionally, optimism over the resumption of U.S.-China trade talks later this month, a surge in oil price as well as a slew of deal activities led to the rally.

While every corner of the market is enjoying this ascent, high-beta ETFs and stocks seem a perfect bet at present.

Why?

Beta measures the price volatility of the stocks or funds relative to the overall market. It has a direct relationship to market movements. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile, while a beta of less than 1 indicates the stock price or fund to be less volatile than the market (read: Market Rallies: High-Beta & Momentum ETFs to Buy).

That said, high-beta stocks seek to capitalize on consistent growth with market-beating returns. This is because when markets soar, high-beta stocks experience larger gains than the broader market counterparts and thus, outpace the rivals. However, these exhibit a higher level of volatility.

Given this bullishness, investors could find the following ETFs and stocks to be intriguing options:

ETF Picks

We have chosen ETFs that are not confined to a specific sector or industry but offer exposure to the broad stock market. Additionally, these have AUM of at least $50 million to ensure better tradability and liquidity.

Invesco S&P 500 High Beta ETF SPHB

This fund offers exposure to the stocks with the highest sensitivity to market movements,or beta over the past 12 months. It follows the S&P 500 High Beta Index.

Zacks Rank: N/A
Beta: 1.44
AUM: $130.4 million
Expense Ratio: 0.25%

ERShares Entrepreneur 30 ETF ENTR

This fund offers exposure to U.S. large-cap entrepreneurial companies with the highest market capitalization and composite scores based on six criteria. This can be easily done by tracking the Entrepreneur 30 Index (read: Salesforce to Buy Tableau: ETFs in Focus).

Zacks Rank: N/A
Beta: 1.44
AUM: $76.9 million
Expense Ratio: 0.49%

Invesco S&P MidCap 400 Pure Value ETF RFV

This product offers exposure to the mid-cap value segment of the U.S. equity market by tracking the S&P Midcap 400 Pure Value Index.

Zacks Rank: #3 (Hold)
Beta: 1.39
AUM: $133.5 million
Expense Ratio: 0.35%

Invesco S&P SmallCap 600 Pure Value ETF RZV

This fund provides pure exposure to the small-cap value segment of the U.S. equity market by tracking the S&P SmallCap 600 Pure Value Index (read: Value Investing Set to Shine: 5 Top-Ranked ETFs & Stocks).

Zacks Rank: #3
Beta: 1.38
AUM: $174.3 million
Expense Ratio: 0.35%

Invesco S&P SmallCap 600 Revenue ETF RWJ

This product offers exposure to securities of the S&P SmallCap 600 but is weighted by revenues instead of market capitalization.

Zacks Rank: #3
Beta: 1.36
AUM: $403.5 million
Expense Ratio: 0.39%

Stocks Picks

We have chosen stocks with a top Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of B or better along with high beta.

Yirendai Ltd. YRD

Based in in Beijing, China, Yirendai is involved in the online consumer finance business. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Rank: #1
VGM Score: B
Beta: 3.14
Market Cap: $838.5 million

Stitch Fix Inc. SFIX

Based in San Francisco, United States, Stitch Fix provides an online subscription and personal shopping platform.

Zacks Rank: #2
VGM Score: B
Beta: 3.01
Market Cap: $3.17 billion

H&E Equipment Services Inc. HEES

Based in Baton Rouge, LA, H&E Equipment Services is one of the largest integrated equipment services companies in the United States with full-service facilities throughout the Intermountain, Southwest, Gulf Coast & Southeast regions of the United States (read: Energy ETFs Jump on Tanker Attacks: What Lies in Store?).

Zacks Rank: #1
VGM Score: B
Beta: 2.83
Market Cap: $1 billion

DXP Enterprises Inc. DXPE

Based in Houston, TX, DXP Enterprises is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada, Mexico and Dubai.

Zacks Rank: #2
VGM Score: B
Beta: 2.66
Market Cap: $615.5 million

Forum Energy Technologies Inc. FET

Headquartered in Houston, TX, Forum Energy Technologies is a global oilfield products company, serving the subsea, drilling, completion, production and infrastructure sectors of the oil and natural gas industry.

Zacks Rank: #1
VGM Score: A
Beta: 2.55
Market Cap: $395.7 million

Bottom Line
 
Given this positivity, high-beta products will continue to generate outsized returns in the coming weeks and are suitable for risk-tolerant investors, given their volatile nature.

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Yirendai Ltd. (YRD) : Free Stock Analysis Report
 
ERShares Entrepreneur 30 ETF (ENTR): ETF Research Reports
 
Oppenheimer S&P SmallCap 600 Revenue ETF (RWJ): ETF Research Reports
 
Invesco S&P 500 High Beta ETF (SPHB): ETF Research Reports
 
Invesco S&P SmallCap 600 Pure Value ETF (RZV): ETF Research Reports
 
Invesco S&P MidCap 400 Pure Value ETF (RFV): ETF Research Reports
 
H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report
 
DXP Enterprises, Inc. (DXPE) : Free Stock Analysis Report
 
Forum Energy Technologies, Inc. (FET) : Free Stock Analysis Report
 
Stitch Fix, Inc. (SFIX) : Free Stock Analysis Report
 
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