The high-beta five: These stocks may jump the most if the market bounces

Published Fri, Mar 11 20221:45 PM EST

Market volatility has been a key theme since the start of the year, but investors hoping to capitalize on a sharp bounce should keep an eye on a handful of stocks, a CNBC Pro screen revealed. The Dow Jones Industrial Average is heading for a fifth straight week of losses , and investors are worrying about inflation and the prospect of interest rate hikes. They are also watching for progress in talks between Russia and Ukraine, which could stabilize commodities prices and boost consumer confidence. The five stocks in CNBC Pro's screen would get a boost from improved investor sentiment, as they have beta values of about 3.0, according to FactSet data. Beta is a measurement of volatility in a stock versus that of the overall market. A beta value that's below 1.0 suggests the stock is less volatile compared to the market, while a value above 1.0 indicates the stock is more volatile. In other words, if the S & P 500 gains by 1%, these high-beta stocks will jump by 3%. All stocks in the screen are down nearly 10% for the year, and some report double-digit losses. To be sure, the strategy is not for the faint of heart — and it's a trade, not a long-term play. This risky trading strategy means a 1% loss in the S & P 500 could mean a 3% tumble in high-beta stocks. If oil prices stabilize, a rise in consumer confidence will help these stocks benefit. Shares of casino companies Caesars Entertainment and MGM Resorts International plummeted this year, falling roughly 17% and 9%, respectively, as of Thursday's close. Caesars Entertainment has a beta value of 3.0. MGM Resorts has a beta of 2.7. Popular trading stock Tesla is down 20% in 2022, but the electric vehicle company's beta is 2.8. A positive turn in the Russia-Ukraine conflict would be a boon to the company, which has seen the price of raw materials like nickel soar from supply chain issues. Norwegian Cruise Line Holdings ' stock is down nearly 15% in 2022, but some analysts say demand and pricing for the cruise travel services firm has remained surprisingly "robust" given challenges from the pandemic. The stock has a beta of 2.7. "If demand/pricing continue to strengthen, we would expect a material amount of upside," Stifel analyst Steven Wieczynski wrote in a Feb. 24 note. "While geopolitical/oil risks will impact near-term sentiment, the long-term outlook remains positive." Royal Caribbean 's stock is down nearly 10% year to date, with a beta of 2.7. Recently, the firm reported disappointing fourth-quarter results, reflecting ongoing struggles from the pandemic.

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Source: Norwegian Cruise Lines

Market volatility has been a key theme since the start of the year, but investors hoping to capitalize on a sharp bounce should keep an eye on a handful of stocks, a CNBC Pro screen revealed.