Uncertainty prevails in the U.S. stock market on escalating Middle East tensions. The two-week ceasefire between the United States and Iran, which is fragile, has grabbed investors’ attention. Thus, with the stock market likely to remain volatile, one can bet on low-beta stocks like Eni SpA E, Futu Holdings Limited FUTU, Cboe Global Markets, Inc. CBOE and BP plc BP.
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 (Strong Buy):Zacks Rank #1 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 29 stocks that qualified for the screening:
Eni
Eni is leading the energy transition. The integrated energy player has been building a full set of decarbonized products and services for clients to achieve carbon neutrality by mid-century. Even though the energy business scenario is volatile, Eni’s efficient exploration keeps it highly competitive.
Futu Holdings
By employing fully digitalized financial services, Futu Holdings gives its clients a new essence of investing. It has been growing at a rapid pace since its clients are investing more money, reflecting the heightened trust of people, even from countries outside Hong Kong. This makes Futu Holdings a true global player.
Cboe Global Markets
Among the business areas where Cboe Global is growing, options trading remains active. As trading activity surges, CBOE collects more fees, which is fueling profits. The company is financially strong with low debt while consistently rewarding shareholders, thereby giving investors added confidence.
BP
The pricing environment for oil and natural gas will likely remain favorable, thanks to the Middle East tensions and mounting clean energy demand. As a result, BP, a British energy giant, is likely to benefit from its upstream operations.
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BP p.l.c. (BP): Free Stock Analysis Report
Eni SpA (E): Free Stock Analysis Report
Cboe Global Markets, Inc. (CBOE): Free Stock Analysis Report
Futu Holdings Limited Sponsored ADR (FUTU): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).