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For investors looking for ways to win back this year’s stock market comeback, looking for cheap and volatile stocks can lead to big gains. Stocks have off to a better start than many investors expected in 2023. Not only is the S&P 500 up over 6% this year, the Nasdaq Composite is up over 13%. Meanwhile, the Dow Jones Industrial Average, the underperforming major index, rose more than 1%. To take advantage of recent strength and gains, investors can look for high-beta value stocks (which are more volatile than the broad market) that are also trading at a discount to their industry, according to the CNBC Pro screen. Because these stocks are positively correlated with the S&P 500, they can continue to rise during a market rally. Although this high beta also means that they may underperform in a downturn. However, investors with an appetite for riskier stocks can make huge profits using this strategy. All of these stocks are members of the iShares Russell Value (IWD) ETF and have a 3-year beta of over 1.5. What’s more, according to FactSet, at least three-quarters of Wall Street analysts who cover the stock recommend it. They are also trading at a discount to their industry average price-to-earnings ratio over the next 12 months. Here are eight names. Based on screening, Alaska Air Group has been identified as a high beta value stock. The carrier has a 3-year 1.7 beta and 87% of analysts covering it rate it as a buy. The shares trade at a forward price-to-earnings multiple of 9.6, below the industry average of 15.8. Citi recently began covering Alaska Air with a Buy rating, saying in December that its “strong pricing, partner airline passenger traffic and repeat flying looks attractive.” Diamondback Energy also made the list. The energy company has a 3-year 2.2 beta, with 84% of the analysts who cover the stock calling for a buy. Its forward price-earnings multiple is 6.2, below the industry benchmark of 9.1. Last month, Wells Fargo initiated coverage of the over-rated Diamondback, saying it was net production in the Permian Basin that “continues to improve well productivity” despite inflationary pressures. GlobalFoundries was also on the list. The semiconductor company has a 3-year 2.1 beta and is recommended by 82% of the analysts covering it. The shares trade at a forward price-earnings multiple of 22.5 versus the industry standard of 23.0. In January, JPMorgan named Globalfoundries one of the top semiconductor manufacturers. Other stocks that were cut included Bath & Body Works, HCA Healthcare and Valero Energy.
Credit: www.cnbc.com /
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