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5 Top-Ranked Stocks With Compelling Relative Price Strength
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The third quarter of 2023 was disappointing for Wall Street, in sharp contrast to the strong bull market of the preceding two quarters. Notably, the S&P 500, which tracks the performance of major U.S.-listed companies, closed with a 4% decline, largely attributed to significant setbacks in August and September. Even in October, U.S. stock futures have displayed volatility.
Investor concerns regarding the Federal Reserve's commitment to prolonged tight monetary policies are prominent. Additionally, heightened geopolitical tensions in the Middle East eroded market participants' confidence in riskier assets, such as equities, all set against the backdrop of the ongoing Russia-Ukraine conflict.
In light of the potential for continued market volatility, savvy investors are shifting their focus toward stocks demonstrating relative price strength. In this uncertain landscape, the strategy of identifying and investing in promising opportunities proves judicious, enabling investors to navigate the turbulent waters of financial markets.
Relative Price Strength Strategy
Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.
Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it.
However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures a winning option on your hands.
Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 for 1 to 3 months at least and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.
Finally, it is crucial to find out whether analysts are optimistic about the upcoming earnings of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.
Screening Parameters
Relative % Price change – 12 weeks greater than 0
Relative % Price change – 4 weeks greater than 0
Relative % Price change – 1 week greater than 0
(We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, four weeks and one week.)
% Change (Q1) Est. over 4 Weeks greater than 0: Positive current-quarter estimate revisions over the last four weeks.
Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks — that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years — can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity.
VGM Score less than or equal to B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Here are five of the 11 stocks that made it through the screen:
Marathon Oil Corporation (MRO - Free Report) : It is a leading oil and natural gas exploration and production company with operations in the United States and Africa. Over the past 60 days, this Houston, TX-based firm saw the Zacks Consensus Estimate for 2023 move up 13%. MRO has a VGM Score of B.
Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 10.8%, on average. MRO shares have gained 3.4% in a year.
Dr. Reddy's Laboratories Ltd. (RDY - Free Report) : Based in India, Dr. Reddy's Laboratories is engaged in providing affordable and innovative medicines in countries like the United States, the UK, Germany, India, Russia, Venezuela, Romania and South Africa. Over the past 60 days, this firm saw the Zacks Consensus Estimate for fiscal 2024 move up 1.6%. RDY has a VGM Score of B.
The fiscal 2024 Zacks Consensus Estimate for Dr. Reddy's Laboratories indicates 15.2% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 39.6%, on average. RDY shares have gone up 29.4% in a year.
American Eagle Outfitters (AEO - Free Report) : The company is a specialty retailer of casual apparel, accessories and footwear for men and women aged 15-25 years. Over the past 60 days, this Pittsburgh, PA-based firm saw the Zacks Consensus Estimate for fiscal 2024 move up 22.9%. AEO has a VGM Score of A.
American Eagle Outfitters’ expected EPS growth rate for three to five years is currently 15.3%, which compares favorably with the industry's growth rate of 14.4%. It has a trailing four-quarter earnings surprise of roughly 43.2%, on average. AEO shares have increased 78.4% in a year.
Peabody Energy Corporation (BTU - Free Report) : It is a U.S.-based coal producer. Over the past 60 days, this Saint Louis, MO-based firm has seen the Zacks Consensus Estimate for 2023 move up 5.4%. BTU has a VGM Score of A.
Peabody Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 8.5%, on average. BTU shares have gained 10.2% in a year.
Skechers USA, Inc. (SKX - Free Report) : Skechers designs, develops, markets, and distributes footwear for men, women, and children in the United States and overseas. The 2023 Zacks Consensus Estimate for this Manhattan Beach, CA-based firm indicates 42.4% year-over-year earnings per share growth. SKX has a VGM Score of A.
Skechers beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 39.1%, on average. SKX shares have gained 44.2% in a year.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
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5 Top-Ranked Stocks With Compelling Relative Price Strength
The third quarter of 2023 was disappointing for Wall Street, in sharp contrast to the strong bull market of the preceding two quarters. Notably, the S&P 500, which tracks the performance of major U.S.-listed companies, closed with a 4% decline, largely attributed to significant setbacks in August and September. Even in October, U.S. stock futures have displayed volatility.
Investor concerns regarding the Federal Reserve's commitment to prolonged tight monetary policies are prominent. Additionally, heightened geopolitical tensions in the Middle East eroded market participants' confidence in riskier assets, such as equities, all set against the backdrop of the ongoing Russia-Ukraine conflict.
In light of the potential for continued market volatility, savvy investors are shifting their focus toward stocks demonstrating relative price strength. In this uncertain landscape, the strategy of identifying and investing in promising opportunities proves judicious, enabling investors to navigate the turbulent waters of financial markets.
Relative Price Strength Strategy
Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.
Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it.
However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures a winning option on your hands.
Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 for 1 to 3 months at least and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.
Finally, it is crucial to find out whether analysts are optimistic about the upcoming earnings of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.
Screening Parameters
Relative % Price change – 12 weeks greater than 0
Relative % Price change – 4 weeks greater than 0
Relative % Price change – 1 week greater than 0
(We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, four weeks and one week.)
% Change (Q1) Est. over 4 Weeks greater than 0: Positive current-quarter estimate revisions over the last four weeks.
Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks — that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years — can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity.
VGM Score less than or equal to B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Here are five of the 11 stocks that made it through the screen:
Marathon Oil Corporation (MRO - Free Report) : It is a leading oil and natural gas exploration and production company with operations in the United States and Africa. Over the past 60 days, this Houston, TX-based firm saw the Zacks Consensus Estimate for 2023 move up 13%. MRO has a VGM Score of B.
Marathon Oil beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 10.8%, on average. MRO shares have gained 3.4% in a year.
Dr. Reddy's Laboratories Ltd. (RDY - Free Report) : Based in India, Dr. Reddy's Laboratories is engaged in providing affordable and innovative medicines in countries like the United States, the UK, Germany, India, Russia, Venezuela, Romania and South Africa. Over the past 60 days, this firm saw the Zacks Consensus Estimate for fiscal 2024 move up 1.6%. RDY has a VGM Score of B.
The fiscal 2024 Zacks Consensus Estimate for Dr. Reddy's Laboratories indicates 15.2% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 39.6%, on average. RDY shares have gone up 29.4% in a year.
American Eagle Outfitters (AEO - Free Report) : The company is a specialty retailer of casual apparel, accessories and footwear for men and women aged 15-25 years. Over the past 60 days, this Pittsburgh, PA-based firm saw the Zacks Consensus Estimate for fiscal 2024 move up 22.9%. AEO has a VGM Score of A.
American Eagle Outfitters’ expected EPS growth rate for three to five years is currently 15.3%, which compares favorably with the industry's growth rate of 14.4%. It has a trailing four-quarter earnings surprise of roughly 43.2%, on average. AEO shares have increased 78.4% in a year.
Peabody Energy Corporation (BTU - Free Report) : It is a U.S.-based coal producer. Over the past 60 days, this Saint Louis, MO-based firm has seen the Zacks Consensus Estimate for 2023 move up 5.4%. BTU has a VGM Score of A.
Peabody Energy beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 8.5%, on average. BTU shares have gained 10.2% in a year.
Skechers USA, Inc. (SKX - Free Report) : Skechers designs, develops, markets, and distributes footwear for men, women, and children in the United States and overseas. The 2023 Zacks Consensus Estimate for this Manhattan Beach, CA-based firm indicates 42.4% year-over-year earnings per share growth. SKX has a VGM Score of A.
Skechers beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 39.1%, on average. SKX shares have gained 44.2% in a year.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.