Do you think market volatility lies ahead? If so, we ran a screen with this idea in mind.
We began by screening the tech sector for stocks with strong liquidity, indicated by current ratios above 3 and quick ratios above 3. The current ratio is current assets/current liabilities, so ratios above 3 indicate the company has at least 3 times the liquid assets to cover their short-term liabilities. The quick ratio is the same as current ratio, except it excludes inventory because it is the least liquid current asset.
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 these stocks would benefit from greater market volatility? Use this list as a starting point for your own analysis.
List sorted by correlation with VIX.
1. Aware Inc. (AWRE): Provides products for the biometrics and Digital Subscriber Line test industries in the United States, Germany, and internationally. Market cap at $120.02M, most recent closing price at $5.68. Current ratio at 19.29, quick ratio at 19.14. Correlation with the VIX index at 0.675 over the last 60 days.
2. Anaren Inc. (ANEN): Designs, develops, manufactures, and sells microwave components and subsystems for the wireless communications, satellite communications, and defense electronics markets. Market cap at $284.29M, most recent closing price at $19.17. Current ratio at 8.43, quick ratio at 5.66. Correlation with the VIX index at 0.639 over the last 60 days.
3. Dolby Laboratories, Inc. (DLB): Develops and delivers products and technologies for the entertainment industry worldwide. Market cap at $4.5B, most recent closing price at $42.09. Current ratio at 8.64, quick ratio at 8.53. Correlation with the VIX index at 0.626 over the last 60 days.
4. Ambient Corporation (AMBT): Develops high-speed Internet protocols-based data communications networks for the medium and low-voltage distribution grids in North America. Market cap at $135.04M, most recent closing price at $8.13. Current ratio at 4.47, quick ratio at 4.33. Correlation with the VIX index at 0.585 over the last 60 days.
5. Power Integrations Inc. (POWI): Designs, develops, manufactures, and markets proprietary, high-voltage, analog, and mixed-signal integrated circuits in the United States and internationally. Market cap at $1.09B, most recent closing price at $38.55. Current ratio at 8.64, quick ratio at 7.32. Correlation with the VIX index at 0.583 over the last 60 days.
6. Affymetrix Inc. (AFFX): Engages in the development, manufacture, sale, and servicing of consumables and systems for genetic analysis in the life sciences and clinical healthcare markets. Market cap at $357.18M, most recent closing price at $5.07. Current ratio at 4.52, quick ratio at 3.67. Correlation with the VIX index at 0.564 over the last 60 days.
7. Cirrus Logic Inc. (CRUS): Develops high-precision analog and mixed-signal integrated circuits. Market cap at $1.85B, most recent closing price at $28.72. Current ratio at 4.82, quick ratio at 4.05. Correlation with the VIX index at 0.52 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.