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5 Stocks With Recent Price Strength for a Strong Portfolio

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The month of May was not as bad for equity investors as it had seemed due to a spike in volatility on market participants' anticipation of the impending inflation. The common adage of Wall Street — sell in May and go away — failed this year.

Major indexes like the Dow and the S&P 500 gained 1.9% and 0.6%, respectively. The small-cap-centric Russell 2000 inched up 0.1%. However, the teach-heavy Nasdaq Composite slid 1.5% on inflation concerns. Notably, the market's fear gauge — the CBOE VIX — dropped nearly 10% in May after skyrocketing 55.5% on May 13 from Apr 30.

We are in the sixth month of 2021 and Wall Street has maintained its northbound journey after finishing an astonishing 2020 despite being ravaged by the pandemic. Year to date, U.S. stock markets have suffered intermittent volatility due to several reasons like speculative trading practice by individual investors, who bought a few key heavily shorted stocks, soaring yields on sovereign bonds and growing expectations of inflationary concerns.

Despite the presence of volatile factors, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied 12.8%, 11.9% and 6.7%, respectively, year to date. Moreover, the small-cap-specific Russell 2000 and S&P 600 have jumped 14.9% and  22.6%, respectively. The mid-cap-centric S&P 400 has climbed 18.2% in the same period.  

This clearly indicates that the overall movement of Wall Street is northward so far in 2021 and the movement is broad-based. This scenario is likely to prevail in the near term also despite the fact that June is historically one of the weakest months on Wall Street.

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 17.

Here we present five out of those 17 stocks:

Select Bancorp Inc. operates as the bank holding company for Select Bank & Trust Company that is engaged in providing personal and business banking products through its branches and the Internet.

The stock price has soared 33.8% 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 35.5% over the last 30 days.

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 jumped 32.3% 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 66.7% over the last 30 days.

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 climbed 31.4% 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.

A-Mark Precious Metals Inc. (AMRK - Free Report) operates as a full service precious metals trading company offering a wide array of products and services. It operates in three segments: Wholesale Trading & Ancillary Services, Secured Lending, and Direct Sales.

The stock price has rallied 28.8% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the fiscal  year ending June 2021. The Zacks Consensus Estimate for the fiscal year has improved more than 100% over the last 30 days.

Titan Machinery Inc. (TITN - Free Report) owns and operates a network of full-service agricultural and construction equipment stores. It operates through three segments: Agriculture, Construction, and International.

The stock price has surged 25% in the past four weeks. The company has an expected earnings growth rate of 32.5% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings has improved 8.4% 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.