5 High-Beta ETFs & Stocks for a Record Market

Wall Street has been roaring higher with all the three major indices hitting record highs last week. The momentum was driven by trade deal optimism and better-than-expected earnings.

In the latest trade development, the United States agreed to remove tariffs in phases and Beijing is also considering removing restrictions on poultry imports. Per Bloomberg News, the first agreement between the superpowers will be signed in the next few weeks. Meanwhile, of the 403 S&P members that reported Q3 results, 73% of the companies beat EPS estimates and 58.1% beat on revenues. The proportion of these companies beating EPS and revenue estimates is in the historical range.

Additionally, monetary easing policy is also driving the stocks higher. The Fed slashed interest rates three times this year by 25 basis points (bps) each. Lower interest rates would make borrowings cheaper, providing a boost to both investment in new projects and repayment of higher-rate debt. As such, it would lead to strong economic growth, and is thus a boon to the stock market (read: 4 Sectors Set to Surge in November: ETFs & Stocks to Buy).

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

Why Beta?

Beta measures the price volatility of 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 is less volatile than the market.

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 (read: 9 High-Flying ETFs of 2019).

Given this bullishness, investors could find the following ETFs and stocks as 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 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: 1.45
AUM: $127.4 million
Expense Ratio: 0.25%

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: 1.42
AUM: $160.2 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: Small Caps Win in September: 5 Best ETFs & Stocks).

Zacks Rank: #3
Beta: 1.38
AUM: $200.7 million
Expense Ratio: 0.35%

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.

Zacks Rank: N/A
Beta: 1.38
AUM: $75.8 million
Expense Ratio: 0.49%

Vanguard U.S. Value Factor ETF VFVA

This is an actively managed ETF and invests in stocks with relatively lower market valuations relative to fundamentals. The portfolio includes a diverse mix of stocks representing many different market capitalizations, market sectors and industry groups (read: Value ETFs Trumping Momentum ETFs: Here's Why).

Zacks Rank: #3
Beta: 1.36
AUM: $72.4 million
Expense Ratio: 0.13%

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.

Civeo Corporation CVEO

Based in Houston, TX, Civeo is a provider of long-term and temporary remote site accommodations, logistics and facility management services.

Zacks Rank: #2
VGM Score: A
Beta: 4
Market Cap: $166.1 million

Jounce Therapeutics Inc. JNCE

Based in Cambridge, United States, Jounce Therapeutics is a clinical-stage immunotherapy company engaged in developing therapies, which enable the immune system to attack tumors. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Rank: #1
VGM Score: A
Beta: 3.51
Market Cap: $133.9 million

Square Inc. SQ

Based in San Francisco, CA, Square offers financial and marketing services through its comprehensive commerce ecosystem that helps sellers to start, run and grow their businesses.

Zacks Rank: #2
VGM Score: B
Beta: 3.38
Market Cap: $26.7 billion

Hanger Inc. HNGR

Headquartered in Austin, TX, Hanger delivers orthotic and prosthetic patient care, and distributes O&P products and rehabilitative solutions (read: Healthcare ETF Tops in October: 5 Best Stocks).

Zacks Rank: #2
VGM Score: A
Beta: 2.99
Market Cap: $896.8 million

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.

Zacks Rank: #1
VGM Score: A
Beta: 2.98
Market Cap: $1.3 billion

Bottom Line
 
Given the 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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Square, Inc. (SQ) : Free Stock Analysis Report
 
ERShares Entrepreneur 30 ETF (ENTR): ETF Research Reports
 
Invesco S&P SmallCap 600 Pure Value ETF (RZV): ETF Research Reports
 
Invesco S&P 500 High Beta ETF (SPHB): ETF Research Reports
 
Invesco S&P MidCap 400 Pure Value ETF (RFV): ETF Research Reports
 
Civeo Corporation (CVEO) : Free Stock Analysis Report
 
H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report
 
Hanger Inc. (HNGR) : Free Stock Analysis Report
 
Jounce Therapeutics, Inc. (JNCE) : Free Stock Analysis Report
 
Vanguard U.S. Value Factor ETF (VFVA): ETF Research Reports
 
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