Do you worry about stock market volatility when choosing among companies? One idea is to consider their correlation with volatility. With this idea in mind, we ran a screen.
We began by screening the healthcare sector for stocks that appear undervalued relative to earnings growth, with PEG below 1.
We then screened for those with strong positive correlations to the volatility (VIX) index over the last two months. This indicates that these stocks have tended to outperform when market uncertainty and volatility spiked. This may bode well if the market sees more volatility in the future. Of course, past performance is no guarantee of future returns.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Tool provided by Kapitall.
Do you think volatility lies ahead for the market? Use this list as a starting point for your own analysis.
List sorted by correlation with the VIX index.
1. Akorn, Inc. (NASDAQ:AKRX): Engages in the manufacture and marketing of diagnostic and therapeutic pharmaceutical products, hospital drugs, and injectable pharmaceuticals in the United States and internationally. Market cap at $1.37B, most recent closing price at $14.37. PEG at 0.74. Correlation with the VIX index at 0.655 over the last 60 days.
2. US Physical Therapy Inc. (NASDAQ:USPH): Operates outpatient physical and occupational therapy clinics in the United States. Market cap at $283.89M, most recent closing price at $24.12. PEG at 0.91. Correlation with the VIX index at 0.566 over the last 60 days.
3. Trinity Biotech plc (NASDAQ:TRIB): Develops, manufactures, distributes, and sells diagnostic test kits and instrumentation worldwide. Market cap at $245.53M, most recent closing price at $11.32. PEG at 0.96. Correlation with the VIX index at 0.529 over the last 60 days.
4. USANA Health Sciences Inc. (NYSE:USNA): Develops, manufactures, distributes, and sells nutritional and personal care products worldwide. Market cap at $592.32M, most recent closing price at $39.86. PEG at 0.72. Correlation with the VIX index at 0.526 over the last 60 days.
*Price data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.