4 Low-Beta Tech Stocks to Hedge Against a Volatile Market
Technology sector stocks have been hit the hardest amid the U.S broader market sell-off year to date (YTD). Since early 2022, Wall Street has been witnessing high volatility due to several economic issues. These include Federal Reserve’s aggressive interest rate hikes, the Russia-Ukraine war-led energy crisis and persistent inflation over the last year.
Major stock market indices in the United States, such as the Dow Jones Industrial Average, Nasdaq Composite and S&P 500 have plunged 19.5%, 31% and 23.3%, respectively, YTD. The Zacks Computer and Technology sector has slumped 34.6% in the same time frame.
Given the supply-chain disruptions as a result of the acute shortage of chips and other input components and currency fluctuations, near-term prospects of the tech sector look gloomy. To add to it, the Federal Reserve’s recent announcement of a sharp interest rate hike of 0.75% at its Federal Open Market Committee (FOMC) meeting to combat inflation is intensifying vulnerability in the tech space.
The challenges are likely to persist in the near term, affecting the price performances of most tech stocks. But the question is should investors interested in tech stocks stay away from investing in the space?
We believe that investing in low-beta tech stocks like AT&T T, Baidu BIDU, Globalstar GSAT, and eGain Corporation EGAN can aid investors in hedging against the current highly volatile market environment.
Beta measures a stock's systematic risk or volatility compared with the market. Therefore, a stock with a beta of less than 1.0 will be less sensitive to the market’s movements than a stock with more than 1.0 beta.
Picking the Right Low-Beta Stocks
We have run the Zacks Stocks Screener to identify stocks with a beta between 0.25 and 0.70. We have narrowed our search by considering stocks with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Our Picks
AT&T is one of the world’s leading communications service carriers and North America’s second-largest wireless service provider. The company is witnessing solid subscriber momentum currently. A customer-centric business model provides the company with healthy growth in its postpaid wireless business alongside a lower churn rate and higher-tier unlimited plans.
This Zacks Rank #2 company has a beta of 0.48. Shares of T have slumped 36.3% YTD.
AT&T Inc. Price and Consensus
AT&T Inc. price-consensus-chart | AT&T Inc. Quote
Headquartered in Dallas, TX, AT&T is actively investing in key areas of 5G and fiber and adjusting its business according to the evolving market scenario to fuel long-term growth. While optimizing operations, it is aiming to increase efficiencies to lower operating costs.
The Zacks Consensus Estimate for T’s 2022 earnings is pegged at $2.52 per share, implying a decrease of 25.9% from the year-ago reported figure. For 2023, the consensus mark for earnings has been revised upward to $2.49 per share over the past seven days, indicating a 1.2% year-over-year fall.
Baidu is a Chinese-language Internet search provider based in Beijing, the People's Republic of China. The company offers a Chinese language search platform and conducts its operations principally through Baidu Online Network Technology Co., Ltd., a network of third-party websites and software applications. It also offers Japanese search services, including web search, image search, video search, and blog search capabilities.
This Zacks Rank #2 company has a beta of 0.66. Shares of BIDU have plunged 19.8% YTD.
Baidu, Inc. Price and Consensus
Baidu, Inc. price-consensus-chart | Baidu, Inc. Quote
Baidu continues to gain from the strong momentum of Apollo Go Robotaxi service across China on the back of its increasing availability in several cities and a growing number of rides. Solid momentum across the company’s AI business is driving its top-line growth. The growing PaddlePaddle developer community and the rising adoption of Baidu ACE smart transportation are contributing well to the company’s AI business.
The consensus mark for BIDU’s 2022 earnings has been revised upward to $9.16 per share from $7.88 over the past 30 days, indicating a 9.1% year-over-year increase. For 2023, the Zacks Consensus Estimate for earnings increased to $11.53 per share from $10.39 over the past 30 days, indicating year-over-year growth of 25.9%.
Globalstar offers satellite voice and data services to commercial and recreational users in over 120 countries around the world. Its products include mobile and fixed satellite telephones, simplex and duplex satellite data modems and flexible service packages. Many land-based and maritime industries benefit from GSAT with increased productivity from remote areas beyond cellular and landline services.
Globalstar currently carries a Zacks Rank #2. It has a beta of 0.26. Shares of GSAT have gained 37% YTD.
Globalstar, Inc. Price and Consensus
Globalstar, Inc. price-consensus-chart | Globalstar, Inc. Quote
Globalstar data solutions are ideal for various asset and personal tracking, data monitoring and SCADA applications. The company's Commercial IoT segment continues to act as a major driver of revenue growth. In its latest quarterly release, Globalstar reported a 20% increase in SPOT activations and a 32% increase in the volume of its Commercial IoT hardware sales.
The consensus mark for GSAT’s 2022 loss is pegged at 5 cents, indicating a 16.7% year-over-year increase. For 2023, the Zacks Consensus Estimate for loss narrowed to 5 cents per share from 6 cents over the past seven days.
eGain is the leading provider of cloud customer engagement hub software. Having a presence in North America, EMEA and APAC, the company offers web customer interaction applications, social customer interaction applications and contact center applications.
eGain solutions help improve customer experience, optimize service processes, and grow sales across the web, social, and phone channels. Hundreds of the world's largest companies rely on eGain to transform their fragmented sales engagement and customer service operations into unified Customer Engagement Hubs. In the latest quarter, the company’s Knowledge Hub solution was adopted by some major global clients, which include a leading global airline, a U.S-based health & benefit service provider and the Department of Taxation of one of the U.S state governments.
eGain Corporation Price and Consensus
eGain Corporation price-consensus-chart | eGain Corporation Quote
Currently, eGain has a Zacks Rank #2. It has a beta of 0.31. Shares of EGAN have declined 26.7% YTD. The Zacks Consensus Estimate for EGAN’s fiscal 2023 earnings is pegged at 14 cents, remaining steady over the past seven days.
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AT&T Inc. (T) : Free Stock Analysis Report
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Globalstar, Inc. (GSAT) : Free Stock Analysis Report
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