After rallying for four months, following the exit from the coronavirus-induced short bear market in April, Wall Street ended the first week of August on a positive note. The market's impressive rally is not out of logic.
First, a series of economic data for the second quarter of 2020 (April to June) showed that the fundamentals of the U.S. economy were stable and the pandemic-led economic devastations were not as severe as initially feared.
Second, a few important economic data for July, which have been released so far, reflected that the economy is holding its footprint even in the face of the second wave of the coronavirus pandemic.
The stock market's impressive performance is primarily being driven by the astonishing growth of the technology sector, which compelled several economists and financial experts to call it the new safe haven. However, the situation has changed in the past month. Cyclical sectors including consumer discretionary, industrials, basic materials and financials also rallied aside from the technology stocks.
At this stage, wouldn’t it be a safer strategy to look for stocks that are winners and have the potential to gain further?
Sounds Good? Here’s How to Execute It: One should primarily target stocks that have freshly been on a bull run. Actually, stocks seeing price strength recently have a high chance of carrying the momentum forward. If a stock is continuously witnessing an uptrend, there must be a solid reason or else it would have probably crashed. So, looking at stocks that are capable of beating the benchmark that they have set for themselves seems rational. However, recent price strength alone cannot create magic. Therefore, 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. Just these few criteria have narrowed down the search from over 7,700 stocks to just 8. Here we present five out of those eight stocks: Mr. Cooper Group Inc. ( COOP Quick Quote COOP - Free Report) provides quality servicing, origination and transaction-based services principally to single-family residences in the United States. Its brand consists of Mr. Cooper and Xome.
The stock price has jumped 55.5% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 85.3% over the last 30 days.
Sirius International Insurance Group Ltd. ( SGC Quick Quote SGC - Free Report) manufactures and sells a wide range of uniforms, corporate I.D., career apparel and accessories for the hospital and healthcare fields, hotels, fast food and other restaurants and public safety, industrial, transportation and commercial markets.
The stock price has climbed 53.1% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved more than 100% over the last 30 days.
Griffon Corp. ( GFF Quick Quote GFF - Free Report) is a diversified management and holding company conducting business through wholly-owned subsidiaries. It oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures.
The stock has rallied 29.8% in the past four weeks. The company has expected earnings growth of 40.7% for the current year (ending September 2020). The Zacks Consensus Estimate for the current year has improved 7.7% over the last 30 days.
Daqo New Energy Corp. ( DQ Quick Quote DQ - Free Report) manufactures and sells polysilicon to photovoltaic product manufactures in China. It offers ready-to-use and packaged polysilicon to meet crucible stacking, pulling and solidification products.
The stock price has surged 25.1% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 1.2% over the last 7 days.
Green Brick Partners Inc. ( GRBK Quick Quote GRBK - Free Report) operates as a homebuilding and land development company in the United States. It operates in three segments: Builder Operations Central, Builder Operations Southeast, and Land Development.
The stock price has appreciated 17.4% in the past four weeks. The company has expected earnings growth of 66.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 18.4% over the last 7 days.
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.