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5 Relative Price Strength Stocks With Strong Return Potential
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The U.S. economy has been showing remarkable resilience despite interest rates being at a 23-year high. Wall Street rebounded in early May after a sharp decline in April job additions, a significant slowdown in U.S. GDP growth for the first quarter of 2024, last month’s contraction in manufacturing and services PMI, and a less hawkish statement by Fed Chairman Jerome Powell after the May FOMC meeting. The rally gained further momentum after the Department of Labor reported a 0.3% month-over-month increase in the consumer price index (CPI) for April.
Amid these favorable economic indicators, savvy investors are now focusing on relative price performance, strategically identifying and investing in the opportunities 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 13 stocks that made it through the screen:
Vital Farms (VITL - Free Report) : The company collaborates with family farms and specializes in the distribution of pasture-raised eggs, butter, and other related products across the United States. The Zacks Consensus Estimate for 2024 earnings of Vital Farms indicates 59.3% growth. Headquartered in Austin, TX, VITL has a VGM Score of B.
Over the past 30 days, the Zacks Consensus Estimate for 2024 earnings has moved up 22.1%. Vital Farms has a trailing four-quarter earnings surprise of roughly 102.1%, on average. VITL shares have increased 170.7% in a year.
Sprouts Farmers Market (SFM - Free Report) : Sprouts Farmers Market operates in the grocery store industry with a unique model that features fresh produce, a foods section, and a vitamin department focused on overall wellness. Over the past 30 days, this Phoenix, AZ-based firm saw the Zacks Consensus Estimate for 2024 move up 5.4%. SFM has a VGM Score of B.
The Zacks Consensus Estimate for 2024 earnings of Sprouts Farmers Market indicates 9.5% growth. The company has a trailing four-quarter earnings surprise of roughly 9.2%, on average. SFM shares have surged 118.2% in a year.
Royal Caribbean Cruises (RCL - Free Report) : It is a cruise company whose brands primarily serve the contemporary, premium and deluxe segments. The 2024 Zacks Consensus Estimate for Miami, FL-based RCL indicates 61.9% year-over-year earnings per share growth. Royal Caribbean Group has a VGM Score of A.
Over the past 30 days, RCL saw the Zacks Consensus Estimate for 2024 move up 9.7%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 18.3%. Royal Caribbean Cruises shares have moved up 87.7% in a year.
Agnico Eagle Mines Limited (AEM - Free Report) : Based in Toronto, Canada, the company is a gold producer. AEM’s expected EPS growth rate for three to five years is currently 26.6%, which compares favorably with the industry's growth rate of 14.3%. The company has a VGM Score of B.
Notably, the Zacks Consensus Estimate for Agnico Eagle Mines’ 2024 earnings per share indicates 42.2% year-over-year growth. The firm has a market capitalization of $35.4 billion. AEM shares have gone up 31.1% in a year.
Organon & Co. (OGN - Free Report) : Based in Jersey City, NJ, the pharmaceutical company offers a portfolio of prescription therapies in the fields of women's health, biosimilars and established medicines. Over the past 30 days, the Zacks Consensus Estimate for 2024 earnings has moved up 4.7%. OGN has a VGM Score of B.
Organon 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 13.6%, on average. OGN shares have gained 5.4% 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.
Image: Bigstock
5 Relative Price Strength Stocks With Strong Return Potential
The U.S. economy has been showing remarkable resilience despite interest rates being at a 23-year high. Wall Street rebounded in early May after a sharp decline in April job additions, a significant slowdown in U.S. GDP growth for the first quarter of 2024, last month’s contraction in manufacturing and services PMI, and a less hawkish statement by Fed Chairman Jerome Powell after the May FOMC meeting. The rally gained further momentum after the Department of Labor reported a 0.3% month-over-month increase in the consumer price index (CPI) for April.
Amid these favorable economic indicators, savvy investors are now focusing on relative price performance, strategically identifying and investing in the opportunities 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 13 stocks that made it through the screen:
Vital Farms (VITL - Free Report) : The company collaborates with family farms and specializes in the distribution of pasture-raised eggs, butter, and other related products across the United States. The Zacks Consensus Estimate for 2024 earnings of Vital Farms indicates 59.3% growth. Headquartered in Austin, TX, VITL has a VGM Score of B.
Over the past 30 days, the Zacks Consensus Estimate for 2024 earnings has moved up 22.1%. Vital Farms has a trailing four-quarter earnings surprise of roughly 102.1%, on average. VITL shares have increased 170.7% in a year.
Sprouts Farmers Market (SFM - Free Report) : Sprouts Farmers Market operates in the grocery store industry with a unique model that features fresh produce, a foods section, and a vitamin department focused on overall wellness. Over the past 30 days, this Phoenix, AZ-based firm saw the Zacks Consensus Estimate for 2024 move up 5.4%. SFM has a VGM Score of B.
The Zacks Consensus Estimate for 2024 earnings of Sprouts Farmers Market indicates 9.5% growth. The company has a trailing four-quarter earnings surprise of roughly 9.2%, on average. SFM shares have surged 118.2% in a year.
Royal Caribbean Cruises (RCL - Free Report) : It is a cruise company whose brands primarily serve the contemporary, premium and deluxe segments. The 2024 Zacks Consensus Estimate for Miami, FL-based RCL indicates 61.9% year-over-year earnings per share growth. Royal Caribbean Group has a VGM Score of A.
Over the past 30 days, RCL saw the Zacks Consensus Estimate for 2024 move up 9.7%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 18.3%. Royal Caribbean Cruises shares have moved up 87.7% in a year.
Agnico Eagle Mines Limited (AEM - Free Report) : Based in Toronto, Canada, the company is a gold producer. AEM’s expected EPS growth rate for three to five years is currently 26.6%, which compares favorably with the industry's growth rate of 14.3%. The company has a VGM Score of B.
Notably, the Zacks Consensus Estimate for Agnico Eagle Mines’ 2024 earnings per share indicates 42.2% year-over-year growth. The firm has a market capitalization of $35.4 billion. AEM shares have gone up 31.1% in a year.
Organon & Co. (OGN - Free Report) : Based in Jersey City, NJ, the pharmaceutical company offers a portfolio of prescription therapies in the fields of women's health, biosimilars and established medicines. Over the past 30 days, the Zacks Consensus Estimate for 2024 earnings has moved up 4.7%. OGN has a VGM Score of B.
Organon 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 13.6%, on average. OGN shares have gained 5.4% 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.