Investors are shifting their focus to sectors like industrials and consumer discretionary, which typically thrive during periods of economic growth and recovery, reflecting optimism about the broader economy. Additionally, the strong performance of small-cap stocks indicates a growing risk appetite.

However, elevated valuations in certain sectors, particularly technology, could face pressure. In this context, building a portfolio of low-beta stocks could be a wise strategy to mitigate potential volatility in the market.

Stocks like Sprouts Farmers Market Inc. SFM, ProAssurance Corporation PRA, Stride Inc. LRN and Calavo Growers Inc CVGW 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 13 stocks that qualified 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.

ProAssurance

ProAssurance has seen an increase in renewal pricing in its medical professional liability business, indicating that its pricing strategy aligns with the rising claims costs. 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.

Stride

Stride maintains a stable business model by revolutionizing the educational experiences of individuals through the utilization of innovative, high-quality and technology-enabled educational solutions.

Calavo Growers

Calavo Growers demonstrated operational flexibility and market resilience through strong performance in its avocado business, even amid temporary supply disruptions from Mexico. By reallocating proceeds from the sale of its Fresh Cut business, the company plans to focus on high-margin growth areas, specifically its core avocado and guacamole operations.

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.

Click here to sign up for a free trial to the Research Wizard today.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ProAssurance Corporation (PRA) : Free Stock Analysis Report

Stride, Inc. (LRN) : Free Stock Analysis Report

Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report

Calavo Growers, Inc. (CVGW) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research