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Sail Through Market Volatility With These 4 Low-Beta Stocks

Broad inflationary pressures are increasing. There are signals from the Fed that in the upcoming meetings, additional rate hikes are likely, thereby raising fears of a recession and spurring market volatility.

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 Scorpio Tankers Inc. STNG, AMN Healthcare Services, Inc. AMN, KnowBe4, Inc. KNBE and BJ's Wholesale Club Holdings, Inc. BJ are worth betting on.

Understanding of 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 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 five that qualified the screening:

Scorpio Tankers is expected to generate significant cashflows since the company is the largest product tanker owner in the world. Scorpio Tankers has a diversified blue-chip customer base, providing services related to the marine transportation of refined petroleum products. For 2022, STNG is likely to see earnings growth of 315.4%.

KnowBe4 is well known name for providing security awareness training and a simulated phishing platform. In the current geopolitical-tension environment, there has been a heightened demand for organizations to establish a strong security culture. In the past 30 days, KnowBe4 has witnessed upward earnings estimate revisions for 2022 and 2023.

AMN Healthcare Services, a leader in total talent solutions for healthcare organizations, has been pleasing shareholders by repurchasing 6.8 million shares since 2016. The portfolio of AMN Healthcare’s diversified solutions is in great demand as healthcare organizations are still facing a massive shortage of labor. In the past 60 days, AMN Healthcare has witnessed upward earnings estimate revisions for 2022 earnings.

BJ's Wholesale Club is a leading player in offering a differentiated shopping experience. BJ is improving its merchandising and witnessing an increased member base in terms of size and quality.

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.

Click here to sign up for a free trial to the Research Wizard today.

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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BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
 
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
 
Scorpio Tankers Inc. (STNG) : Free Stock Analysis Report
 
KnowBe4, Inc. (KNBE) : Free Stock Analysis Report
 
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