Spicy Stocks: High-Beta Stocks Showing Relative Strength

If you are looking for some excitement in your portfolio, these volatile stocks went from laggards to leaders.

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Aggressive investors looking for more excitement in their portfolios might consider buying high-beta stocks showing signs of a turnaround. This month’s First Cut begins with stocks of U.S. exchange-listed companies that have a market capitalization over $250 million—small cap and larger—and a beta in the 70th percentile or greater, according to AAII’s Stock Investor Pro fundamental stock screening and research database.

Beta is a measure of a stock’s price volatility when compared against a benchmark. A stock with a beta of 1.00 won’t necessarily track the benchmark, but it will have the same level of volatility. A stock like Chaince Digital Holdings Inc. (CD), which has a beta of 8.44, is likely to have dramatic price moves relative to its large-cap benchmark.

The high-beta stocks are then screened for below-average 52-week relative strength rank and high four-week relative strength rank (75th percentile or greater). This identifies stocks that were laggards but are now leaders. Positive cash flow is required as a quality check.

Given the high volatility of these stocks, it’s important to research what might be driving a stock’s recent increase in relative strength and decide whether that factor might persist.

Stock Investor Pro Screening Criteria

	Field:	Operator:	Factor:	Compare to:
	Country	Equals		United States
And	% Rank-Beta	>		70
And	Market Cap Q1	>		250
And	Cash flow Q1	>		0
And	% Rank-Rel Strength 52 week	<		50
And	% Rank-Rel Strength 4 week	>		80