3 Green Zone Stocks to Fit Every Type of Investor

By TradeSmith Research Team

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The process behind how a stock receives a status in the Green Zone, Yellow Zone, or Red Zone is a little complicated, involving algorithms that rigorously compute different data points.

But what’s not complicated is the result.

You can instantly see if a company is in our Green Zone, as well as know at what point that stock triggered a “buy” signal.

Of course, stocks in our Green Zone still come with different levels of risk, and everyone has their own appetite for risk and personal financial situation to consider.

To truly make the most out of our system, you first need to know who you are as an investor so that you’re comfortable in the decisions that you’re making.

Today, we’re going to help you answer that question for yourself by sharing three different investor personality types, along with a stock in our Green Zone that fits into each.

No. 1: The Conservative Investor

Conservative investors want less risk in their investments, and they’re willing to give up better rewards to avoid that risk.

Another way to think about it is that conservative investors want to reduce variability in their portfolios.

Knowing this, it’s fair to say that a conservative investor is looking for well-run companies with long track records of generating profits and cash.

Ideally, management focuses on returning value to shareholders through consistent dividend growth and/or share buybacks.

Exxon Mobil Corp. (XOM) is a great example of a company that fits the bill.

The recent shortages in crude oil and natural gas have pushed commodity prices to some of their highest levels in over a decade.

Even if that suddenly changed, the stock price for Exxon Mobil isn’t likely to drop as quickly as other speculative energy names.

XOM is filling demand in the here and now, generating $23.4 billion in revenue in the first six months of 2022.

It’s able to then take that revenue and pass it on to shareholders with its dividend payout, which currently yields 3.6%.

No. 2: The Moderate Investor

It stands to reason that a moderate investor sits somewhere between a conservative and an aggressive investor.

Moderate investors may be willing to take action a little faster than conservative investors, and Williams-Sonoma Inc. (WSM) offers a recent example of this scenario.

WSM’s high-end home goods business grew 22% in 2021, outperforming the U.S. home furnishings industry growth of 7%. The company believes that a favorable trend for it going forward is that remote work is here to stay, and more folks will be focusing on updating their homes with new furnishings.

In the chart below, you can see that on Aug. 1., WSM triggered an Early Entry Signal in our system, which was then followed by an Entry Signal on Aug. 8.

A moderate investor may have felt a little more comfortable with buying shares of WSM on Aug. 1 when the Early Entry Signal was triggered rather than waiting for confirmation from the second Entry Signal.

The moderate investor also gets the benefit of WSM paying out a dividend with a yield of 2.01%, so even if the stock price is more volatile, they can look forward to a consistent dividend payout that can help bring more peace of mind.

No. 3: The Aggressive Investor

Aggressive investing doesn’t necessarily mean buying up as many penny stocks as possible.

It simply means you are able to tolerate more risk and variance in your portfolio.

For example, Coinbase Global Inc. (COIN) moved into our Green Zone on Aug. 4, and as you can see from the price swings, you have to be comfortable with a certain amount of volatility to be a COIN shareholder.

CEO Keith Kaplan recently shared a report detailing some long-term positive momentum for Coinbase, but he also cautioned that COIN might not be an investment that everyone would feel comfortable making.

As you’ve seen from the different stocks shared, that’s the beauty of our Health Indicator System and Green Zone stocks.

You’re able to find a “buy” opportunity that fits your investor type and comfort level.

We hope you have a safe and long holiday weekend.