Back to top

Image: Bigstock

5 Stocks With Recent Price Strength to Enhance Your Returns

Read MoreHide Full Article

Wall Street has maintained its northbound journey for the past 11 months. However, the drivers of the rally have changed. Cyclical sectors like consumer discretionary, industrials, materials, financials and oil-energy have taken the reins in 2021 from the growth-oriented technology space in 2020.

Ongoing nationwide COVID-19 vaccination and a steep reduction in new coronavirus cases have bolstered market participants' expectation of a faster reopening of the economy. Moreover, President Joe Biden signed the new $1.9 trillion coronavirus-aid package on Mar 12. The fresh stimulus is likely to significantly boost pent-up demand for U.S. consumers.

Meanwhile, U.S. manufacturing industries are at the forefront of the economy's revival from coronavirus-led unprecedented devastations. U.S. manufacturing showed a V-shaped recovery in the last nine months. Notably, before the pandemic, this segment had struggled throughout 2019 due to intensifying trade war between the United States and China. Therefore, the ongoing recovery of U.S. manufacturing is more commendable.

Additionally, the nonfarm payroll data for the first two months of 2021 has shown that the U.S. labor market is systematically heading toward stabilization. The labor market, which was the best-performing segment of the U.S. economy before the outbreak of coronavirus, suffered the most during the pandemic. Although most of the segments of the economy are showing signs of recovery albeit at a slow pace, the labor market is still in jeopardy.

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 34.

Here we present five out of those 34 stocks:

Veritiv Corp. (VRTV - Free Report) operates as a business-to-business provider of value-added packaging products and services, as well as facility solutions, print, and publishing products and services in the United States, Canada, Mexico, and internationally.

The stock price has soared 104.7% in the past four weeks. The company has expected earnings growth of 29.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 80% over the last 7 days.

Danaos Corp. (DAC - Free Report) owns and operates containerships in Australia, Asia, Europe, and the United States. It offers seaborne transportation services, such as chartering its vessels to liner companies.

The stock price has jumped 28.8% in the past four weeks. The company has an expected earnings growth rate of 92.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the last 30 days.

Select Medical Holdings Corp. (SEM - Free Report) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers in the United States.

The stock price has climbed 26.9% in the past four weeks. The company has an expected earnings growth rate of 18% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 47.7% over the last 30 days.

EnPro Industries Inc. (NPO - Free Report) designs, develops, manufactures, and markets engineered industrial products worldwide. It operates through two segments, Sealing Products and Engineered Products.

The stock price has rallied 24.1% in the past four weeks. The company has an expected earnings growth rate of 12% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 62.9% over the last 30 days.

ArcelorMittal (MT - Free Report) is the world’s leading steel and mining company that owns and operates steel manufacturing and mining facilities in Europe, North and South America, Asia, and Africa.

The stock price has surged 18.1% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved  3.7% 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.