Amid uncertainty surrounding the U.S. election and potential interest rate cuts, the market is expected to experience ongoing volatility. Hence, investors should brace for fluctuations as these key events shape market sentiment. Given the backdrop, constructing a portfolio of low-beta stocks may be prudent.
In this regard, stocks like JD.com Inc JD, Skyward Specialty Insurance Group Inc SKWD, Corcept Therapeutics Incorporated CORT and ProAssurance Corporation PRA 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 17 stocks that qualified the screening:
JD.com
JD.com has grown from an online shopping platform to helping other businesses run more efficiently using its technology. The company is known for its supply chain and has become a leader in this space. JD.com is strongly committed to returning capital to shareholders, as reflected in its recent announcement of $5 billion in a new stock buyback program.
Skyward Specialty Insurance
A rapidly growing and innovative specialty insurance company, Skyward Specialty, is experiencing growing gross written premiums and a handsome return on equity. By broadening its renewable energy solutions, the company showcases its forward-thinking strategy in addressing the demands of a rapidly expanding market. By leveraging a team of industry specialists and customized coverage options, it is ideally suited to offer targeted risk management for the renewable energy industry.
Corcept Therapeutics
Corcept has spent more than 25 years dedicated to advancing cortisol modulation, resulting in the discovery of more than 1,000 unique selective modulators. With a strong focus on innovation, the company is conducting advanced clinical trials aimed at treating various serious disorders, including hypercortisolism, solid tumors, ALS and liver disease. This positions Corcept as a key player in the field of medical research and treatment development.
ProAssurance
ProAssurance has seen an increase in renewal pricing in its medical professional liability business, indicating that its pricing strategy is aligning with the rising costs of claims. Also, the company has a solid financial position, as evidenced by its balance sheet, which shows that more than 90% of its investment portfolio consists of investment-grade fixed maturities.
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.
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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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