In This Article:
The market's robust performance seems to hinge largely on the anticipation of a rate cut. A market downturn could be triggered if the Federal Reserve decides not to reduce rates. In this scenario, focusing on a portfolio of low-beta stocks may be a prudent approach to reduce exposure to potential market volatility.
Stocks like Sprouts Farmers Market Inc. SFM, Trip.com Group Limited TCOM, Stride Inc. LRN and Virtu Financial Inc VIRT 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 among 11 stocks that qualified for the screening:
Sprouts Farmers Market
Increasing customer engagement and solid comparable store sales are benefiting Sprouts Farmers Market. SFM is positioning itself for continued growth with plans to open 33 new stores in 2024 and a projected comparable store sales growth of 8% to 10% for the fourth quarter of 2024.
Trip.com Group
Trip.com Group is poised to gain from catering to senior citizens’ growing interest in travel and travel bookings from lower-tier cities in China. Using artificial intelligence, the company has been efficiently serving more people.