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When investors evaluate the potential of a stock to offer returns, they primarily consider earnings and valuation multiples. At the same time, measuring the performance of such a stock relative to its industry or peers assumes significance.
On such comparison, if we find that a stock is unable to match up to wider sectoral growth, it may be better to avoid it. On the other hand, outperformers should be incorporated into your portfolio, since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures you have 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 over a period of 1 to 3 months at the least and having solid fundamentals indicate room for growth, and are the best ways to go about this strategy.
Finally, it is important to find out whether analysts are optimistic about the upcoming earnings results 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, 4 weeks and 1 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 17 stocks that made it through the screen:
Thor Industries Inc. (THO - Free Report) : Headquartered in Elkhart, IN, Thor Industries is one of the world's biggest manufacturer, marketer and distributor of recreation vehicles (RVs) for the outdoor leisure travel market. The company has a VGM score of “A” and an excellent earnings surprise history. It surpassed estimates in each of the last four quarters at an average rate of 24.08%.
The Children's Place Inc. (PLCE - Free Report) : A leading North American specialty retailer of apparel and accessories for children from newborn to 14 years of age, Secaucus, NJ-based The Children’s Place has a VGM score of “A”. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2017 and 2018 increased 8% and 9%, respectively, to $5.06 and $5.62 per share.
Engility Holdings Inc. : Headquartered in Chantilly, VA, Engility Holdings is a provider of services in engineering, professional support and mission support for the U.S. Government worldwide. The company has a VGM score of “A” and surprised earnings to the upside in each of the last four quarters.
Kinsale Capital Group Inc. (KNSL - Free Report) : Kinsale Capital group offers Property & Casualty insurance with exclusive focus on the higher value-added Excess & Surplus segment. Sporting a VGM score of “B”, this Richmond, VA headquartered company’s expected EPS growth rate for 3 to 5 years currently stands at 15% –– comparing favorably with the industry growth rate of just 10.20%.
Bob Evans Farms Inc. : Based in New Albany, OH, Bob Evans Farms is a full-service restaurant company operating more than 500 eateries, apart from producing and distributing refrigerated and frozen convenience foods. The fiscal 2017 Zacks Consensus Estimate for this company is $2.23, representing 10% earnings per share growth over fiscal 2016. The next fiscal year’s average forecast is $2.44, pointing to 9% growth. Bob Evans Farms has a VGM score of “A”.
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.
Zacks Restaurant Recommendations: Inaddition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
Unique Zacks Analysis of Your Chosen Ticker
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5 Picks to Excel on Solid Relative Price Strength
When investors evaluate the potential of a stock to offer returns, they primarily consider earnings and valuation multiples. At the same time, measuring the performance of such a stock relative to its industry or peers assumes significance.
On such comparison, if we find that a stock is unable to match up to wider sectoral growth, it may be better to avoid it. On the other hand, outperformers should be incorporated into your portfolio, since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures you have 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 over a period of 1 to 3 months at the least and having solid fundamentals indicate room for growth, and are the best ways to go about this strategy.
Finally, it is important to find out whether analysts are optimistic about the upcoming earnings results 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, 4 weeks and 1 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 17 stocks that made it through the screen:
Thor Industries Inc. (THO - Free Report) : Headquartered in Elkhart, IN, Thor Industries is one of the world's biggest manufacturer, marketer and distributor of recreation vehicles (RVs) for the outdoor leisure travel market. The company has a VGM score of “A” and an excellent earnings surprise history. It surpassed estimates in each of the last four quarters at an average rate of 24.08%.
The Children's Place Inc. (PLCE - Free Report) : A leading North American specialty retailer of apparel and accessories for children from newborn to 14 years of age, Secaucus, NJ-based The Children’s Place has a VGM score of “A”. Over the past 30 days, the Zacks Consensus Estimate for fiscal 2017 and 2018 increased 8% and 9%, respectively, to $5.06 and $5.62 per share.
Engility Holdings Inc. : Headquartered in Chantilly, VA, Engility Holdings is a provider of services in engineering, professional support and mission support for the U.S. Government worldwide. The company has a VGM score of “A” and surprised earnings to the upside in each of the last four quarters.
Kinsale Capital Group Inc. (KNSL - Free Report) : Kinsale Capital group offers Property & Casualty insurance with exclusive focus on the higher value-added Excess & Surplus segment. Sporting a VGM score of “B”, this Richmond, VA headquartered company’s expected EPS growth rate for 3 to 5 years currently stands at 15% –– comparing favorably with the industry growth rate of just 10.20%.
Bob Evans Farms Inc. : Based in New Albany, OH, Bob Evans Farms is a full-service restaurant company operating more than 500 eateries, apart from producing and distributing refrigerated and frozen convenience foods. The fiscal 2017 Zacks Consensus Estimate for this company is $2.23, representing 10% earnings per share growth over fiscal 2016. The next fiscal year’s average forecast is $2.44, pointing to 9% growth. Bob Evans Farms has a VGM score of “A”.
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.
Zacks Restaurant Recommendations: Inaddition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »