DWDI - Betas & Short Term Stock Ratings

I was pleasantly surprised when I looked up the Beta's for each of the companies in the Dollar Wise Decisions Index (DWDI) because, with the exception of Home Depot, which had a beta of 1.51 and Microsoft which had a beta of 1.02, all the other stocks had beta's no higher than 0.68

Recall from my last post that a beta indicates a company's volatility and that betas greater than one indicate greater volatility than the market and betas less than one indicate less volatility.
For instance, many utility stocks have betas less than one while many Nasdaq stocks have a beta greater than one.

This is exactly what we saw with yesterdays market results. The market was up in general and the NASDAQ was up 19 basis points higher than the DWDI however as mentioned, since NASDAQ stocks generally have a beta higher than 1 we would expect a greater gain from those stocks when the market is up - however, when the market is down we would also expect a much greater loss.

Betas and Stock Scouter Ratings for DWDI stocks

Company	Symbol	Beta	Rating
Anheuser-Busch	BUD	0.26	6
Biomet	BMET	0.08	6
Fastenal	FAST	0.68	5
Home Depot	HD	1.51	8
Johnson & Johnson	JNJ	0.29	8
Medtronic	MDT	0.41	9
Microsoft	MSFT	1.02	7
Wal-Mart	WMT	0.60	6
Washington Post	WPO	0.29	6
Wrigley	WWY	0.17	6

Average Beta = 0.531
Average Rating = 6.7

These are really great results, we have a portfolio here with an average Beta of 0.531 which means this portfolio as a whole is about 1/2 as volatile as the Market. If we take HD out of the mix our average drops to 0.42
The lowest msn Stock Scouter Rating comes from Fastenal (which is a bit of a surprise) at 5 but according to msn, at a rating of 5 Fastenal is expected to outperform the market with less than average risk. For a stock like BUD, rated at a 6, the outlook is to match the market with very low risk.

Keep in mind, these are all 5 star stocks according to MorningStar and one of the criteria in our initial search was below average risk so it's nice to see the Betas and msn Stock Scouter ratings confirm this below average risk.

Also, with such robust ratings for each of these stocks we should see the divergence between the DWDI and the S&P 500 (as portrayed by SPY) increase. The DWDI should go up more than the S&P on days when the market is up and fall by less than the S&P when the market is down.