As we step into the New Year, it is time to focus on good investment opportunities.
Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is important to check whether its price performance exceeds its peers or the industry average. Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it. However, those outperforming their respective industries or benchmarks should be included in your portfolio, since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures that 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, four weeks and one 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. 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. VGM Score less than or equal to B: Here are the four stocks that made it through the screen: Cabot Corporation ( CBT Quick Quote CBT - Free Report) : Cabot is a leading global provider of chemical and material products for transportation, infrastructure and industrial applications. The fiscal 2021 Zacks Consensus Estimate for this Boston, MA-based company indicates 61.5% earnings per share growth over fiscal 2020. Cabot has a VGM Score of B. Myers Industries, Inc. ( MYE Quick Quote MYE - Free Report) : An international manufacturer and distributor of plastic and rubber products, Myers Industries has a VGM Score of B. Over 60 days, the Akron, OH-based operator has seen the Zacks Consensus Estimate for 2021 improve 7.5%. Target Corporation ( TGT Quick Quote TGT - Free Report) : The Minneapolis, MN-based company has evolved from being just a pure brick-&-mortar retailer to an omni-channel entity. Target has a VGM Score of A and an excellent earnings surprise history, having surpassed estimates in each of the last four quarters by 52.37%, on average. Vale S.A. ( VALE Quick Quote VALE - Free Report) : Vale is one of the world’s largest mining companies. The 2021 Zacks Consensus Estimate for this Brazil-based company indicates 64% earnings per share growth over 2020. Vale has a VGM Score of B. 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.