Buy These 3 Low-Beta Stocks To Sail Through A Choppy Market

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The market is fearing recession since the Federal Reserve is committed to combating inflation at all costs while tightening monetary policy. The market will possibly be choppy since most analysts are of the view that economic activity is cooling.

Hence, creating a portfolio of low-beta stocks is of utmost importance since the securities will deliver healthy returns and provide a shield against volatile market conditions. In this regard, stocks like Sanderson Farms, Inc. (SAFM - Free Report), United Therapeutics Corporation (UTHR - Free Report), and AMN Healthcare Services, Inc. (AMN - Free Report) are worth betting on.

Beta Understanding

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. 

Here are three stocks that qualified the screening:

Sanderson Farms secures stable cashflows from producing, processing, and distributing fresh, frozen, and minimally prepared chicken. Backed by higher average selling prices, Sanderson Farms is experiencing increased margins. For fiscal 2022, Sanderson Farms has experienced increased earnings estimate revisions over the past 30 days.

United Therapeutics has been focusing on finding ways to cure diseases like pulmonary arterial hypertension and several life-threatening illnesses. In this mission, United Therapeutics has gained approvals from FDA for five medicines. Overall, the company's prospects are bright on the back of its aim of creating manufactured organs at a massive scale for transplantation.

AMN Healthcare Services, a leader in total talent solutions for healthcare organizations, recently pleased shareholders with the announcement of a $250 million share repurchase program. The portfolio of AMN Healthcare’s diversified solutions is in great demand since 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.

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 ...

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