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5 Relative Price Strength Stocks Compelling Enough to Buy
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The U.S. economy has shown remarkable strength this year, culminating in the S&P 500 Index’s all-time high last week. With three consecutive weeks of gain and 12 out of 13 weeks in positive territory, Wall Street's benchmark has demonstrated resilience.
Following a notable decline in the inflation rate last year, the Federal Reserve responded by initially scaling back the intensity of interest rate hikes and eventually halting them altogether in July 2023. This strategic decision contributed to an impressive 23.9% rally in the S&P 500 Index last year.
Going forward in 2024, the Fed is poised to implement an interest rate reduction. This move is anticipated to be favorable for stock markets, as a lower risk-free interest rate will decrease the discount rate, positively impacting the net present value of equity investments. Bolstered by robust economic growth in the fourth quarter, the outlook for markets in 2024 remains optimistic.
In light of this favorable scenario, astute investors are concentrating on relative price performance, strategically identifying and capitalizing on promising opportunities that offer the potential for accelerated returns.
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 seven stocks that made it through the screen:
AZZ Inc. (AZZ - Free Report) : Based in Fort Worth, TX, the company is engaged in the galvanizing and coil coatings business. AZZ’s expected EPS growth rate for three to five years is currently 14%, which compares favorably with the industry's growth rate of 10.9%. The company has a VGM Score of A.
Notably, the 2024 Zacks Consensus Estimate for AZZ indicates 4.9% year-over-year earnings per share growth. The company has a market capitalization of $1.6 billion. AZZ shares have gone up 50.7% in a year.
Universal Technical Institute, Inc. (UTI - Free Report) : Founded in 1965, it operates workplace training programs for professionals in the technical industry and transportation. The fiscal 2024 Zacks Consensus Estimate for this firm indicates 376.9% year-over-year earnings per share growth. Headquartered in Phoenix, AZ, UTI has a VGM Score of B.
Universal Technical Institute 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 188.5%, on average. UTI shares have risen 104.4% in a year.
Acuity Brands, Inc. (AYI - Free Report) : Based in Atlanta, GA, Acuity Brands specializes in lighting and building management solutions across North America and beyond. Over the past 60 days, this firm saw the Zacks Consensus Estimate for fiscal 2024 move up 10.5%. AYI has a VGM Score of B.
The fiscal 2024 Zacks Consensus Estimate for Acuity Brands indicates 5.3% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 13.9% on average. AYI shares have increased 29.2% in a year.
PACCAR Inc. (PCAR - Free Report) : The company is a leading manufacturer of heavy-duty vehicles in the world and has substantial manufacturing exposure to light/medium trucks. Over the past 60 days, this Bellevue, WA-based firm saw the Zacks Consensus Estimate for 2024 move up 6.6%. PCAR has a VGM Score of A.
PACCAR beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 17.1%, on average. PCAR shares have increased 40.3% in a year.
The Progressive Corporation (PGR - Free Report) : It is one of the major auto insurers in the country. The 2024 Zacks Consensus Estimate for this firm indicates 40.3% year-over-year earnings per share growth. Headquartered in Mayfield, OH, PGR has a VGM Score of B.
Progressive’s expected EPS growth rate for three to five years is currently 20.9%, which compares favorably with the industry's growth rate of 13.4%. PGR shares have shot up 32.5% 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 Relative Price Strength Stocks Compelling Enough to Buy
The U.S. economy has shown remarkable strength this year, culminating in the S&P 500 Index’s all-time high last week. With three consecutive weeks of gain and 12 out of 13 weeks in positive territory, Wall Street's benchmark has demonstrated resilience.
Following a notable decline in the inflation rate last year, the Federal Reserve responded by initially scaling back the intensity of interest rate hikes and eventually halting them altogether in July 2023. This strategic decision contributed to an impressive 23.9% rally in the S&P 500 Index last year.
Going forward in 2024, the Fed is poised to implement an interest rate reduction. This move is anticipated to be favorable for stock markets, as a lower risk-free interest rate will decrease the discount rate, positively impacting the net present value of equity investments. Bolstered by robust economic growth in the fourth quarter, the outlook for markets in 2024 remains optimistic.
In light of this favorable scenario, astute investors are concentrating on relative price performance, strategically identifying and capitalizing on promising opportunities that offer the potential for accelerated returns.
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 seven stocks that made it through the screen:
AZZ Inc. (AZZ - Free Report) : Based in Fort Worth, TX, the company is engaged in the galvanizing and coil coatings business. AZZ’s expected EPS growth rate for three to five years is currently 14%, which compares favorably with the industry's growth rate of 10.9%. The company has a VGM Score of A.
Notably, the 2024 Zacks Consensus Estimate for AZZ indicates 4.9% year-over-year earnings per share growth. The company has a market capitalization of $1.6 billion. AZZ shares have gone up 50.7% in a year.
Universal Technical Institute, Inc. (UTI - Free Report) : Founded in 1965, it operates workplace training programs for professionals in the technical industry and transportation. The fiscal 2024 Zacks Consensus Estimate for this firm indicates 376.9% year-over-year earnings per share growth. Headquartered in Phoenix, AZ, UTI has a VGM Score of B.
Universal Technical Institute 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 188.5%, on average. UTI shares have risen 104.4% in a year.
Acuity Brands, Inc. (AYI - Free Report) : Based in Atlanta, GA, Acuity Brands specializes in lighting and building management solutions across North America and beyond. Over the past 60 days, this firm saw the Zacks Consensus Estimate for fiscal 2024 move up 10.5%. AYI has a VGM Score of B.
The fiscal 2024 Zacks Consensus Estimate for Acuity Brands indicates 5.3% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 13.9% on average. AYI shares have increased 29.2% in a year.
PACCAR Inc. (PCAR - Free Report) : The company is a leading manufacturer of heavy-duty vehicles in the world and has substantial manufacturing exposure to light/medium trucks. Over the past 60 days, this Bellevue, WA-based firm saw the Zacks Consensus Estimate for 2024 move up 6.6%. PCAR has a VGM Score of A.
PACCAR beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 17.1%, on average. PCAR shares have increased 40.3% in a year.
The Progressive Corporation (PGR - Free Report) : It is one of the major auto insurers in the country. The 2024 Zacks Consensus Estimate for this firm indicates 40.3% year-over-year earnings per share growth. Headquartered in Mayfield, OH, PGR has a VGM Score of B.
Progressive’s expected EPS growth rate for three to five years is currently 20.9%, which compares favorably with the industry's growth rate of 13.4%. PGR shares have shot up 32.5% 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.