In This Article:
Although the recent 90-day pause in the U.S.-China trade conflict is cheering the market, it does not provide complete relief. The market will remain highly volatile without a comprehensive trade agreement and greater clarity on broader economic policy.
In this context, creating a curated portfolio of low-beta stocks is a prudent strategy. This provides a safeguard against the uncertain market, equipping investors to navigate volatility with greater resilience and foresight.
Hence, stocks like Bridgewater Bancshares, Inc. BWB, Stride Inc. LRN, 908 Devices Inc. MASS and Philip Morris International Inc. PM are worth betting on.
What Does Beta of a Stock Measure?
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 Using Research Wizard:
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 four of the 18 stocks that qualified for the screening:
Bridgewater Bancshares
Attractive loan rates and well-managed deposit costs are helping Bridgewater Bancshares grow its lending and deposit businesses. Handsome loan demand, especially in affordable housing, is reflecting a lucrative business environment for Bridgewater Bancshares. Notably, the company is keeping problem loans low while managing risks carefully. Also, to reward shareholders, BWB is buying back its shares.