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5 Stocks With Relative Price Strength Prospects Worth Buying
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On Friday, the S&P 500 Index, commonly known as the Wall Street benchmark, achieved a significant milestone by closing above 5,000 for the first time. This milestone came after briefly touching the 5,000 level the previous day, marking a historic moment for the index. As a matter of fact, last week was the fifth consecutive week of gains and the 14th positive week out of the previous 15.
The U.S. economy's fundamentals remain strong, as reported by the Department of Commerce, with fourth-quarter 2023 growth reaching 3.3%, surpassing the consensus estimate of 2%. Overall, U.S. GDP grew 2.5% in 2023 compared to 1.9% in 2022, exceeding the initial estimate of 2% for the year.
Positive indicators such as solid nonfarm payrolls in January, robust consumer spending in December and an improving manufacturing index in January have alleviated concerns about an imminent recession among investors. Additionally, consumer confidence experienced a significant increase in January.
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
Investors generally gauge a stock’s potential returns by examining earnings growth and valuation multiples. At the same time, it’s essential to measure the performance of such a stock relative to its industry or peers, or an appropriate benchmark.
If you see that a stock is underperforming on fundamental factors, it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance of providing considerable returns.
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 16 stocks that made it through the screen:
Ralph Lauren Corporation (RL - Free Report) : Based in New York, the company is a major designer, marketer and distributor of premium lifestyle products worldwide. RL’s expected EPS growth rate for three to five years is currently 15.3%, which compares favorably with the industry's growth rate of 10.7%. The company has a VGM Score of A.
Notably, the fiscal 2024 Zacks Consensus Estimate for Ralph Lauren indicates 19.9% year-over-year earnings per share growth. The company has a market capitalization of $11.3 billion. RL shares have gone up 44.6% in a year.
Amazon.com, Inc. (AMZN - Free Report) : Founded in 1994, it is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. The 2024 Zacks Consensus Estimate for this firm indicates 39% year-over-year earnings per share growth. Headquartered in Seattle, WA, AMZN has a VGM Score of A.
Amazon.com beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 51%, on average. AMZN shares have risen 74.3% in a year.
AXIS Capital Holdings Limited (AXS - Free Report) : Based in Pembroke, Bermuda, the company provides a broad range of specialty insurance and reinsurance solutions to its clients on a worldwide basis. Over the past 60 days, AXIS Capital Holdings saw the Zacks Consensus Estimate for 2024 move up 6%. AXS has a VGM Score of A.
The 2024 Zacks Consensus Estimate for AXIS Capital Holdings indicates 2.5% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 102.6% on average. AXS shares have decreased 1.8% in a year.
Powell Industries, Inc. (POWL - Free Report) : The company custom-engineers equipment and systems focused on electrical infrastructure. Over the past 60 days, this Houston, TX-based firm saw the Zacks Consensus Estimate for fiscal 2024 move up 44.2%. POWL has a VGM Score of A.
Powell Industries’ expected EPS growth rate for three to five years is currently 14%, which compares favorably with the industry's growth rate of 11.1%. It has a trailing four-quarter earnings surprise of roughly 77.6%, on average. POWL shares have surged 260.4% in a year.
Xerox Holdings Corporation (XRX - Free Report) : Engaged in the document management solutions business, the company's offerings include printers, copiers, software solutions, managed print services, and cloud computing solutions. The 2024 Zacks Consensus Estimate for this firm indicates 13.2% year-over-year earnings per share growth. Headquartered in Norwalk, CT, XRX has a VGM Score of A.
Over the past 60 days, Xerox saw the Zacks Consensus Estimate for 2024 move up 16.4%. The company has a trailing four-quarter earnings surprise of roughly 64.8%, on average. XRX shares have gained 9.3% in a year. (AXS - Free Report) (AXS - Free Report) 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 Stocks With Relative Price Strength Prospects Worth Buying
On Friday, the S&P 500 Index, commonly known as the Wall Street benchmark, achieved a significant milestone by closing above 5,000 for the first time. This milestone came after briefly touching the 5,000 level the previous day, marking a historic moment for the index. As a matter of fact, last week was the fifth consecutive week of gains and the 14th positive week out of the previous 15.
The U.S. economy's fundamentals remain strong, as reported by the Department of Commerce, with fourth-quarter 2023 growth reaching 3.3%, surpassing the consensus estimate of 2%. Overall, U.S. GDP grew 2.5% in 2023 compared to 1.9% in 2022, exceeding the initial estimate of 2% for the year.
Positive indicators such as solid nonfarm payrolls in January, robust consumer spending in December and an improving manufacturing index in January have alleviated concerns about an imminent recession among investors. Additionally, consumer confidence experienced a significant increase in January.
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
Investors generally gauge a stock’s potential returns by examining earnings growth and valuation multiples. At the same time, it’s essential to measure the performance of such a stock relative to its industry or peers, or an appropriate benchmark.
If you see that a stock is underperforming on fundamental factors, it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance of providing considerable returns.
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 16 stocks that made it through the screen:
Ralph Lauren Corporation (RL - Free Report) : Based in New York, the company is a major designer, marketer and distributor of premium lifestyle products worldwide. RL’s expected EPS growth rate for three to five years is currently 15.3%, which compares favorably with the industry's growth rate of 10.7%. The company has a VGM Score of A.
Notably, the fiscal 2024 Zacks Consensus Estimate for Ralph Lauren indicates 19.9% year-over-year earnings per share growth. The company has a market capitalization of $11.3 billion. RL shares have gone up 44.6% in a year.
Amazon.com, Inc. (AMZN - Free Report) : Founded in 1994, it is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. The 2024 Zacks Consensus Estimate for this firm indicates 39% year-over-year earnings per share growth. Headquartered in Seattle, WA, AMZN has a VGM Score of A.
Amazon.com beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 51%, on average. AMZN shares have risen 74.3% in a year.
AXIS Capital Holdings Limited (AXS - Free Report) : Based in Pembroke, Bermuda, the company provides a broad range of specialty insurance and reinsurance solutions to its clients on a worldwide basis. Over the past 60 days, AXIS Capital Holdings saw the Zacks Consensus Estimate for 2024 move up 6%. AXS has a VGM Score of A.
The 2024 Zacks Consensus Estimate for AXIS Capital Holdings indicates 2.5% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 102.6% on average. AXS shares have decreased 1.8% in a year.
Powell Industries, Inc. (POWL - Free Report) : The company custom-engineers equipment and systems focused on electrical infrastructure. Over the past 60 days, this Houston, TX-based firm saw the Zacks Consensus Estimate for fiscal 2024 move up 44.2%. POWL has a VGM Score of A.
Powell Industries’ expected EPS growth rate for three to five years is currently 14%, which compares favorably with the industry's growth rate of 11.1%. It has a trailing four-quarter earnings surprise of roughly 77.6%, on average. POWL shares have surged 260.4% in a year.
Xerox Holdings Corporation (XRX - Free Report) : Engaged in the document management solutions business, the company's offerings include printers, copiers, software solutions, managed print services, and cloud computing solutions. The 2024 Zacks Consensus Estimate for this firm indicates 13.2% year-over-year earnings per share growth. Headquartered in Norwalk, CT, XRX has a VGM Score of A.
Over the past 60 days, Xerox saw the Zacks Consensus Estimate for 2024 move up 16.4%. The company has a trailing four-quarter earnings surprise of roughly 64.8%, on average. XRX shares have gained 9.3% in a year.
(AXS - Free Report) (AXS - Free Report)
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.