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Stay Ahead of Time: Buy 8 Stocks with Recent Price Strength
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Investors always seek a winning strategy, but it is easier said than done. And when the market is as volatile as it is now, things may take a turn for the worse any moment.
No matter how disciplined and systematic investors are, equity market volatility will always manage to get the better of them. While a few lucky ones rake in the moolah, others fall victim to ad hoc strategies.
One could take resort to commonly used techniques to find beaten down stocks that have the potential to recover faster than others. However, even such investment choices bear the risk of disappointment. Particularly, one could be stuck in the value trap if the hidden weaknesses in a selected stock are not identified.
So, wouldn’t it be a safer strategy to look for stocks that are winners currently and have the potential to gain further?
Here’s how to execute it:
One should primarily look for stocks that have recently been witnessing price increase. Actually, stocks seeing price strength recently have a high chance of carrying the momentum forward.
If a stock is continuously moving higher, there must be a good reason for the rise or else it probably would have fallen like the losers. So, looking at those stocks that have already won the game and are capable of beating the benchmark that they have already set sounds rational.
However, recent price strength alone cannot create magic, so you need to set other relevant parameters to create a successful investment strategy.
Here’s how you should create the screen to shortlist the current as well as the potential winners.
Screening Parameters:
Percentage Change in Price (4 Weeks) greater than zero: This criterion shows that the stock has moved higher in the last four weeks.
Percentage Change Price (12 Weeks) greater than 10: This indicates that the stock has seen momentum over the last three months. This lowers the risk of choosing stocks that may have drawn attention due to the overwhelming performance of the overall market in a very short period.
Zacks Rank 1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Average Broker Rating 1: This indicates that brokers are also highly hopeful about the stock’s future performance.
Current Price greater than 5: The stocks must all be trading at a minimum of $5.
Current Price/ 52-Week High-Low Range more than 85%: This criterion filters stocks that are trading near their respective 52-week highs. It indicates that these are strong enough in terms of price.
Here are eight of the 19 stocks that made it through this screen:
Cutera Inc. (CUTR - Free Report) designs, develops, manufactures and markets the CoolGlide family of products for use in laser and other light-based aesthetic applications. The company surpassed the Zacks Consensus Estimate thrice while missed the same on one occasion in the trailing four quarters. It has an average positive earnings surprise of 240.58%.
Willdan Group Inc. (WLDN - Free Report) is a provider of professional technical and consulting services to utilities, private industry, and public agencies at all levels of government. The company surpassed the Zacks Consensus Estimate thrice while missed the same once in the trailing four quarters. It has an average positive earnings surprise of 18.72%.
NVE Corporation (NVEC - Free Report) is a recognized leader in the practical commercialization of spintronics, which many experts believe represents the next generation of microelectronics. The company surpassed the Zacks Consensus Estimate thrice while missed the same on one occasion in the trailing four quarters. It has an average positive earnings surprise of 8.77%.
Eagle Bancorp Montana Inc. (EBMT - Free Report) operates as a holding company for American Federal Savings Bank that provides retail banking services in the south central portion of Montana. The company surpassed the Zacks Consensus Estimate thrice and matched it once in the trailing four quarters, with an average positive surprise of 19.35%.
FutureFuel Corporation (FF - Free Report) manufacturers diversified chemical products and biobased products comprising biofuels and biobased specialty chemical products. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an average positive earnings surprise of 60.59%.
Alleghany Corporation is engaged, through its subsidiaries in the sale and underwriting of title insurance and in other real estate-related services businesses, and in certain other financial services businesses. The company surpassed the Zacks Consensus Estimate thrice while missed the same on one occasion in the trailing four quarters. It has an average positive earnings surprise of 20.52%.
Forestar Group Inc. (FOR - Free Report) formerly known as Forestar Real Estate Group Inc. operates in two business segments: real estate and natural resources. The real estate segment owns directly or through ventures real estate. The natural resources segment manages acres of oil and gas mineral interests. The company surpassed the Zacks Consensus Estimate thrice while missed the same on one occasion in the trailing four quarters. It has an average positive earnings surprise of 340.75%.
Asure Software Inc. (ASUR - Free Report) , formerly Forgent Networks, Inc., is a provider of Web-based workforce management solutions. The company surpassed the Zacks Consensus Estimate in back-to-back two quarters.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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: In addition 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 »
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Stay Ahead of Time: Buy 8 Stocks with Recent Price Strength
Investors always seek a winning strategy, but it is easier said than done. And when the market is as volatile as it is now, things may take a turn for the worse any moment.
No matter how disciplined and systematic investors are, equity market volatility will always manage to get the better of them. While a few lucky ones rake in the moolah, others fall victim to ad hoc strategies.
One could take resort to commonly used techniques to find beaten down stocks that have the potential to recover faster than others. However, even such investment choices bear the risk of disappointment. Particularly, one could be stuck in the value trap if the hidden weaknesses in a selected stock are not identified.
So, wouldn’t it be a safer strategy to look for stocks that are winners currently and have the potential to gain further?
Here’s how to execute it:
One should primarily look for stocks that have recently been witnessing price increase. Actually, stocks seeing price strength recently have a high chance of carrying the momentum forward.
If a stock is continuously moving higher, there must be a good reason for the rise or else it probably would have fallen like the losers. So, looking at those stocks that have already won the game and are capable of beating the benchmark that they have already set sounds rational.
However, recent price strength alone cannot create magic, so you need to set other relevant parameters to create a successful investment strategy.
Here’s how you should create the screen to shortlist the current as well as the potential winners.
Screening Parameters:
Percentage Change in Price (4 Weeks) greater than zero: This criterion shows that the stock has moved higher in the last four weeks.
Percentage Change Price (12 Weeks) greater than 10: This indicates that the stock has seen momentum over the last three months. This lowers the risk of choosing stocks that may have drawn attention due to the overwhelming performance of the overall market in a very short period.
Zacks Rank 1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Average Broker Rating 1: This indicates that brokers are also highly hopeful about the stock’s future performance.
Current Price greater than 5: The stocks must all be trading at a minimum of $5.
Current Price/ 52-Week High-Low Range more than 85%: This criterion filters stocks that are trading near their respective 52-week highs. It indicates that these are strong enough in terms of price.
Here are eight of the 19 stocks that made it through this screen:
Cutera Inc. (CUTR - Free Report) designs, develops, manufactures and markets the CoolGlide family of products for use in laser and other light-based aesthetic applications. The company surpassed the Zacks Consensus Estimate thrice while missed the same on one occasion in the trailing four quarters. It has an average positive earnings surprise of 240.58%.
Willdan Group Inc. (WLDN - Free Report) is a provider of professional technical and consulting services to utilities, private industry, and public agencies at all levels of government. The company surpassed the Zacks Consensus Estimate thrice while missed the same once in the trailing four quarters. It has an average positive earnings surprise of 18.72%.
NVE Corporation (NVEC - Free Report) is a recognized leader in the practical commercialization of spintronics, which many experts believe represents the next generation of microelectronics. The company surpassed the Zacks Consensus Estimate thrice while missed the same on one occasion in the trailing four quarters. It has an average positive earnings surprise of 8.77%.
Eagle Bancorp Montana Inc. (EBMT - Free Report) operates as a holding company for American Federal Savings Bank that provides retail banking services in the south central portion of Montana. The company surpassed the Zacks Consensus Estimate thrice and matched it once in the trailing four quarters, with an average positive surprise of 19.35%.
FutureFuel Corporation (FF - Free Report) manufacturers diversified chemical products and biobased products comprising biofuels and biobased specialty chemical products. The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an average positive earnings surprise of 60.59%.
Alleghany Corporation is engaged, through its subsidiaries in the sale and underwriting of title insurance and in other real estate-related services businesses, and in certain other financial services businesses. The company surpassed the Zacks Consensus Estimate thrice while missed the same on one occasion in the trailing four quarters. It has an average positive earnings surprise of 20.52%.
Forestar Group Inc. (FOR - Free Report) formerly known as Forestar Real Estate Group Inc. operates in two business segments: real estate and natural resources. The real estate segment owns directly or through ventures real estate. The natural resources segment manages acres of oil and gas mineral interests. The company surpassed the Zacks Consensus Estimate thrice while missed the same on one occasion in the trailing four quarters. It has an average positive earnings surprise of 340.75%.
Asure Software Inc. (ASUR - Free Report) , formerly Forgent Networks, Inc., is a provider of Web-based workforce management solutions. The company surpassed the Zacks Consensus Estimate in back-to-back two quarters.
Get the rest of the stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and backtesting software.
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: In addition 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 »