Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.
Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.
Below, we take a look at Alcoa (AA - Free Report) , a company that currently holds a Momentum Style Score of B. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.
It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Alcoa currently has a Zacks Rank of #1 (Strong Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.
You can see the current list of Zacks #1 Rank Stocks here >>>
Set to Beat the Market?
In order to see if AA is a promising momentum pick, let's examine some Momentum Style elements to see if this bauxite, alumina and aluminum products company holds up.
A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.
For AA, shares are up 14.48% over the past week while the Zacks Metal Products - Distribution industry is up 2.62% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 24.85% compares favorably with the industry's 5.64% performance as well.
While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Alcoa have increased 51.55% over the past quarter, and have gained 262.07% in the last year. On the other hand, the S&P 500 has only moved -6.26% and 12.92%, respectively.
Investors should also take note of AA's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. Right now, AA is averaging 8,250,351 shares for the last 20 days.
Earnings Outlook
The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock's price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with AA.
Over the past two months, 4 earnings estimates moved higher compared to 1 lower for the full year. These revisions helped boost AA's consensus estimate, increasing from $5.45 to $8.03 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been 1 downward revision in the same time period.
Bottom Line
Given these factors, it shouldn't be surprising that AA is a #1 (Strong Buy) stock and boasts a Momentum Score of B. If you're looking for a fresh pick that's set to soar in the near-term, make sure to keep Alcoa on your short list.
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Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.
Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.
Below, we take a look at Alcoa (AA - Free Report) , a company that currently holds a Momentum Style Score of B. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.
It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Alcoa currently has a Zacks Rank of #1 (Strong Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.
You can see the current list of Zacks #1 Rank Stocks here >>>
Set to Beat the Market?
In order to see if AA is a promising momentum pick, let's examine some Momentum Style elements to see if this bauxite, alumina and aluminum products company holds up.
A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.
For AA, shares are up 14.48% over the past week while the Zacks Metal Products - Distribution industry is up 2.62% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 24.85% compares favorably with the industry's 5.64% performance as well.
While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Alcoa have increased 51.55% over the past quarter, and have gained 262.07% in the last year. On the other hand, the S&P 500 has only moved -6.26% and 12.92%, respectively.
Investors should also take note of AA's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. Right now, AA is averaging 8,250,351 shares for the last 20 days.
Earnings Outlook
The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock's price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with AA.
Over the past two months, 4 earnings estimates moved higher compared to 1 lower for the full year. These revisions helped boost AA's consensus estimate, increasing from $5.45 to $8.03 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been 1 downward revision in the same time period.
Bottom Line
Given these factors, it shouldn't be surprising that AA is a #1 (Strong Buy) stock and boasts a Momentum Score of B. If you're looking for a fresh pick that's set to soar in the near-term, make sure to keep Alcoa on your short list.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
Get the latest research report on AA - FREE