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How to Find "Strong Buy" Stocks Trading at Highs

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September is the weakest month for the stock market over the last century. Peeking ahead, October is often rough for the stock market during election years. The seasonality, mixed with a slowing U.S. economy and investors anxious to preserve profits after the furious rally that began last November, caused a wave of volatility and selling.   

That said, the market has already cooled and the stock market's core drivers—earnings and interest rates—should remain tailwinds for the foreseeable future. On top of that, some stocks are always outperforming and hitting new highs amid market pullbacks.

Today we explore a screen that helps investors find stocks experiencing impressive upward earnings revisions activity, helping them earn Zacks Rank #1 (Strong Buys).

The stocks we screen for are also momentum names trading near 52-week highs amid the broader pullback that investors might want to buy in September.

Screen Basics

 

The screen we are looking into today comes loaded with the Research Wizard. The screen helps investors dig through all of the Zacks Rank #1 (Strong Buy) stocks, of which there are over 200 at any given time, to find some of the top momentum names.

The screen narrows down the list of Zacks Rank #1 (Strong Buy) stocksto those with upward price momentum that are also trading within 20% of their 52-week highs. The screen then uses the PEG ratio and the Price to Sales ratio to help make sure investors are getting value as well. The screen then makes your life a little easier and narrows it down to just seven stock picks.

The screen basics are listed below…

·       Zacks Rank = #1 (Strong Buy)

·       Current Price/52-week High >= 0.8

·       PEG Ratio: P/E F(1)/EPS Growth <= 1

·       Price/Sales <= 3

·       Percentage Change Price -12 Weeks = Top # 7

This strategy comes loaded with the Research Wizard and it is called bt_sow_momentum_method1 It can be found in the SoW (Screen of the Week) folder.

The screen is pretty simple, yet powerful. Here is one of the seven stocks that made it through this week's screen…

Time to Buy Surging Universal Health Services Stock?

 

Universal Health Services, Inc. (UHS - Free Report)  is a hospital and healthcare services powerhouse operating across the U.S., Puerto Rico, and the U.K. Across all of its subsidiaries, Universal Health Services operates 27 inpatient acute care hospitals, 333 inpatient behavioral health facilities, and more than 40 outpatient facilities and ambulatory care access points.

On top of that, Universal Health Services’ business spans insurance, a physician network, and various related services.

Zacks Investment Research
Image Source: Zacks Investment Research

Universal Health Services has grown its revenue and earnings at an impressive rate over the last 20 years. Universal Health Services has crushed our bottom-line estimates by an average of 15% in the trailing four quarters, including a big beat-and-raise second quarter in late July.

Universal Health Services’ consensus 2024 earnings estimate is up 15% since then, with its FY25 estimate 16% higher, helping it earn its Zacks Rank #1 (Strong Buy).

Universal Health Services is projected to grow its revenue by 10% this year and another 6% next year to help boost its adjusted earnings by 51% and 10%, respectively. UHS is part of the Medical – Hospital space that lands in the top 2% of 250 Zacks industries, highlighting the near-term upside for the entire industry.

Zacks Investment Research
Image Source: Zacks Investment Research

UHS stock has climbed 110% in the past two years, including a 50% YTD surge. Universal Health Services hit new highs in early September and has more than doubled the S&P 500 in the past 20 years.

Despite the outperformance and the run to all-time highs, Universal Health Services trades at its 20-year median and at a 35% discount to its highs at 13.3X forward 12-month earnings. UHS trades at 0.9X forward sales, which marks a 67% discount to the Zacks Medical sector. Universal Health Services also pays a dividend. 

Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it.

Click here to sign up for a free trial to the Research Wizard today.

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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: www.zacks.com/performance_disclosure


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