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5 Stocks With Recent Price Strength Amid Inflation Concern
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Last week was a disappointing one for Wall Street primarily due to concerns related to the impending inflation. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — fell 1.1%, 1.4% and 2.3% respectively, marking their worst weekly performance since Feb 26.
Inflation will reduce the net present value of stock investing. This is more likely for the technology stocks. Higher inflation may compel the Fed to increase the benchmark interest rate earlier-than-expected. This will be detrimental to growth stocks like technology as these companies are dependent on easy access to credit at a cheap rate to grow their businesses.
Moreover, with regards to economic data, retail sales in April were flat with March, but missed the consensus estimate of an increase of 1.1%. Industrial production rose 0.7% in April compared with the consensus estimate of 1.1% growth.
On May 7, the Department of Labor reported a highly disappointing jobs data. Nonfarm payroll increased a mere 266,000 in April compared with the consensus estimate of 1.035 million. The unemployment rate nudged up to 6.1% in April from 6% in March. The consensus estimate was 5.7%. 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 32.
Here we present five out of those 32 stocks:
Townsquare Media Inc. (TSQ - Free Report) operates as a radio, digital media, entertainment, and digital marketing solutions company in small and mid-sized markets. It operates through the Advertising, Townsquare Interactive, and Live Events segments.
The stock price has soared 31.9% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13% over the last 30 days.
Medifast Inc. (MED - Free Report) manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific.
The stock price has jumped 30.7% in the past four weeks. The company has an expected earnings growth rate of 49% for the current year. The Zacks Consensus Estimate for the current year has improved 25.1% over the last 30 days.
Delta Apparel Inc. (DLA - Free Report) designs, manufactures, sources, and markets activewear and lifestyle apparel products in the United States and internationally. It operates through two segments, Delta Group and Salt Life Group.
The stock price has climbed 26.9% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the fiscal year ending September 2021. The Zacks Consensus Estimate for the fiscal year has improved 13.9% over the last 30 days.
Genco Shipping & Trading Ltd. (GNK - Free Report) is engaged in the ocean transportation of dry bulk cargoes worldwide. Its vessels transport iron ore, coal, grains, steel products, and other dry-bulk cargoes.
The stock price has surged 22% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.7% over the last 7 days.
Star Bulk Carriers Corp. (SBLK - Free Report) is a shipping company engaged in the ocean transportation of dry bulk cargoes worldwide. Its vessels transport a range of major bulks, including iron ores, coal, and grains and minor bulks, such as bauxite, fertilizers and steel products.
The stock price has advanced 21.9% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 33.2% 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.
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.
Image: Bigstock
5 Stocks With Recent Price Strength Amid Inflation Concern
Last week was a disappointing one for Wall Street primarily due to concerns related to the impending inflation. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — fell 1.1%, 1.4% and 2.3% respectively, marking their worst weekly performance since Feb 26.
Inflation will reduce the net present value of stock investing. This is more likely for the technology stocks. Higher inflation may compel the Fed to increase the benchmark interest rate earlier-than-expected. This will be detrimental to growth stocks like technology as these companies are dependent on easy access to credit at a cheap rate to grow their businesses.
Moreover, with regards to economic data, retail sales in April were flat with March, but missed the consensus estimate of an increase of 1.1%. Industrial production rose 0.7% in April compared with the consensus estimate of 1.1% growth.
On May 7, the Department of Labor reported a highly disappointing jobs data. Nonfarm payroll increased a mere 266,000 in April compared with the consensus estimate of 1.035 million. The unemployment rate nudged up to 6.1% in April from 6% in March. The consensus estimate was 5.7%.
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 32.
Here we present five out of those 32 stocks:
Townsquare Media Inc. (TSQ - Free Report) operates as a radio, digital media, entertainment, and digital marketing solutions company in small and mid-sized markets. It operates through the Advertising, Townsquare Interactive, and Live Events segments.
The stock price has soared 31.9% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13% over the last 30 days.
Medifast Inc. (MED - Free Report) manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific.
The stock price has jumped 30.7% in the past four weeks. The company has an expected earnings growth rate of 49% for the current year. The Zacks Consensus Estimate for the current year has improved 25.1% over the last 30 days.
Delta Apparel Inc. (DLA - Free Report) designs, manufactures, sources, and markets activewear and lifestyle apparel products in the United States and internationally. It operates through two segments, Delta Group and Salt Life Group.
The stock price has climbed 26.9% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the fiscal year ending September 2021. The Zacks Consensus Estimate for the fiscal year has improved 13.9% over the last 30 days.
Genco Shipping & Trading Ltd. (GNK - Free Report) is engaged in the ocean transportation of dry bulk cargoes worldwide. Its vessels transport iron ore, coal, grains, steel products, and other dry-bulk cargoes.
The stock price has surged 22% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.7% over the last 7 days.
Star Bulk Carriers Corp. (SBLK - Free Report) is a shipping company engaged in the ocean transportation of dry bulk cargoes worldwide. Its vessels transport a range of major bulks, including iron ores, coal, and grains and minor bulks, such as bauxite, fertilizers and steel products.
The stock price has advanced 21.9% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 33.2% 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.