Following a robust performance in 2024, with the S&P 500 climbing almost 24%, investor sentiment became highly optimistic and even euphoric. This surge in enthusiasm led to stock prices becoming overinflated, resulting in overbought conditions. Consequently, a natural pullback occurred as the market took a step back to adjust and absorb the gains made earlier.
Thus, the market will likely remain choppy, resulting in a need to focus on a portfolio of low-beta stocks, which may be a prudent approach to reducing exposure to potential market volatility.
Stocks like Mission Produce Inc AVO, Coterra Energy Inc. CTRA, JinkoSolar Holding Co Ltd JKS and Atour Lifestyle Holdings Limited ATAT are thus worth betting on.
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.
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 of the six stocks that qualified for the screening:
Mission Produce
As a global leader in the avocado industry, Mission Produce is well-positioned to capitalize on the growing consumer demand for healthy eating. Avocados, rich in more than 20 vitamins and minerals, offer significant health benefits for the heart, skin and weight management, making them an increasingly popular choice among health-conscious consumers.
Coterra Energy
Coterra Energy stands out as a leading upstream energy company with operations in prominent shale regions such as the Permian Basin, Marcellus Shale and Anadarko Basin. The company recently finalized two distinct definitive agreements to acquire high-quality assets in the Permian – the most prolific basin in the United States – enhancing its production prospects.
JinkoSolar
JinkoSolar is among the leading manufacturers of innovative solar modules. The company has maintained its global leading position in module shipments, with 25.9 gigawatts shipped in the third quarter of 2024.
Atour Lifestyle
Atour Lifestyle has established itself as a leading hospitality and lifestyle brand in China. The company is experiencing significant growth, with an expanding pipeline of hotel developments. Its Atour 4.0 and Atour Light 3.0 properties have demonstrated impressive occupancy rates, highlighting their strong position and appeal in the mid-scale and upper mid-scale hotel markets.
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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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JinkoSolar Holding Company Limited (JKS) : Free Stock Analysis Report
Coterra Energy Inc. (CTRA) : Free Stock Analysis Report
Mission Produce, Inc. (AVO) : Free Stock Analysis Report
Atour Lifestyle Holdings Limited Sponsored ADR (ATAT) : Free Stock Analysis Report
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