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Chicago, IL - August 20, 2015 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the First American Financial Corporation ( FAF ), Marcus Corporation ( MCS ), Civista Bancshares, Inc. ( CIVB ), Hallmark Financial Services Inc. ( HALL ) and Cal-Maine Foods, Inc. ( CALM ).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .
Here are highlights from Wednesday's Analyst Blog:
5 Low-Beta Stocks to Fight Volatility
As the earnings season winds down and fears surrounding Greece subside, volatility was expected to reduce substantially. However, benchmarks experienced declines on last Tuesday and Thursday. However, they still managed to end the week with marginal gains or closed nearly flat.
The reason for the mid-week downswing was the devaluation of the yuan, which heightened concerns about China's economy. Such a phenomenon is likely to continue going forward, accompanied by uncertainty about the timing of a possible rate hike.
In such a scenario, picking value stocks that have low beta may be a prudent option. Beta measures the tendency of a stock's returns to respond to market swings. Low correlation stocks provide protection during turbulent times as they are less prone to day-to-day fluctuations.
ChinaFears Heighten
On Aug 11, China reduced the yuan's daily reference rate by 1.9%, the largest devaluation of the yuan in nearly 20 years. The surprise devaluation weighed on U.S. markets, with benchmarks losing a minimum of 1%. PBOC's decision to reduce the yuan's daily reference rate by 1.9% is the latest in the series of attempts to prop up the economy.
Despite a series of measures being taken by the government, China's economy is a major cause for concern. Most economic data released this month has been disappointing in nature, indicating underlying China's economic weakness.
The outlook for the country's economy continues to be weak and it seems that further devaluations could be in the offing. The Shanghai Composite Index slumped 6.1% on Tuesday, closing only 240 points higher than the low it touched on Jul 8. Stocks in China declined despite a record injection of funds in a day in more than one and a half years.
Rate Hike Uncertainty
Meanwhile, uncertainty regarding the timing of a rate hike continues to prevail. Some clarity on this front may be provided by the minutes of the FOMC meeting held on Jul 29 which is scheduled for release on Aug 19. However, few clues were provided by Fed minutes last time. Additionally, the central bank's observations on the economy will be dated, since they were made before the yuan's devaluation.
On the economic front, the evidence is mixed. Labor market data continues to look promising. Growth has also picked up per last month's figures, but came in below estimates. Additionally, contradictory signals on the economy have been emerging from time to time.
Data released on Aug 17 is the perfect example. The NAHB/Wells Fargo Housing Market index increased from 60 to 61 in August. Such a reading was last recorded in Nov 2005. In contrast, the Empire State manufacturing index slumped from 3.9 in July to a negative reading of 14.9. This indicates a significant contraction and is the lowest reading recorded since Apr 2009. A substantial fall in new orders and shipments caused such a drastic decline.
Our Choices
The most popular indication of market volatility, also known as the market's "fear gauge" is the CBOE Volatility Index (VIX). The VIX increased 5.9% to settle at 13.79 on Aug 18. Over the last one month, the VIX has increased by 12.6% while it gained 7.3% over the last three months.
This adds to the other evidence that volatility will increase in the days ahead. In such a situation, picking value stocks with low beta would be a good option. Our selection in also backed by good Zacks Value Score and Zacks Rank.
We narrowed down our choices with the help of our new style score system .
Our research shows that stocks with Value Style Scores of 'A' or 'B' when combined Zacks Rank # 1 (Strong Buy) or Zacks Rank #2 (Buy) offer the best investment opportunities in the value investing space.
First American Financial Corporation ( FAF ) produces provides financial services through its Title Insurance and Services segment and its Specialty Insurance segment.
First American Financial holds a Zacks Rank #1 (Strong Buy) and has a Value Style Score of 'A.' The stock has a beta value of 0.7. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 15.64. The company has expected earnings growth of 23.2% for the current year.
The Marcus Corporation ( MCS ) engages in the lodging and entertainment industries. It operates through two segments: Movie Theatres, and Hotels and Resorts.
The Marcus Corporation holds a Zacks Rank #1 (Strong Buy) and has a Value Style Score of 'A.' The stock has a beta value of 0.7 and a P/E (F1) of 17.55x.The company has expected earnings growth of 25.7% for the current year.
Civista Bancshares, Inc. ( CIVB ) is a bank holding company. The company is involved in the business of community banking, through its subsidiaries
Civista Bancshares holds a Zacks Rank #1 (Strong Buy) and has a Value Style Score of 'A.' The stock has a beta value of 0.72 and a P/E (F1) of 9.47x.The company has expected earnings growth of 28.2% for the current year.
Hallmark Financial Services Inc. ( HALL ) and its wholly owned subsidiaries are engaged in the sale of property and casualty insurance products.
Hallmark Financial Services holds a Zacks Rank #1 (Strong Buy) and has a Value Style Score of 'A.' The stock has a beta value of 0.77 and a P/E (F1) of 11.43x. The company has expected earnings growth of 49.3% for the current year.
Cal-Maine Foods, Inc. ( CALM ) is engaged in the production, cleaning, grading, and packaging of fresh shell eggs for sale to shell egg retailers.
Cal-Maine Foods holds a Zacks Rank #1 (Strong Buy) and has a Value Style Score of 'A.' The stock has a beta value of 0.77 and a P/E (F1) of 6.15x.The company has expected earnings growth of over 100% for the current year.
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FIRST AMER FINL (FAF): Free Stock Analysis Report
MARCUS CORP (MCS): Free Stock Analysis Report
CIVISTA BANCSH (CIVB): Free Stock Analysis Report
HALLMARK FINL (HALL): Free Stock Analysis Report
CAL-MAINE FOODS (CALM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
