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5 Stocks With Recent Price Strength Following a Strong 1H

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Wall Street completed an impressive first half of 2021 after a stellar run in 2020 despite the pandemic. The three major stock indexes — the Dow, the S&P and the Nasdaq Composite — rallied 12.7%, 14.4% and 12.5%, respectively, in first-half 2021. The mid-cap specific S&P 400 climbed 16.9% in the same period. Meanwhile, the two small-cap centric indexes — the Russell 2000 and the S&P 600 — jumped 17% and 22.9%, respectively.

Nationwide COVID-19 vaccinations, a sharp decline in new coronavirus cases, a faster-than-expected reopening of the economy, an unprecedented fiscal stimulus, Fed's ongoing easy-money policy and the Fed Chairman's reiteration that the inflation is transitory despite raising the inflation forecast for 2021, significantly bolstered market participants' confidence in risky assets like equities.

The Congressional Budget Office (CBO) has raised its outlook for U.S. GDP growth rate in 2021 to 7.4%, marking a significant jump from the 4.6% forecast on Feb 1. Thereafter, GDP is expected grow around 2.8% per annum through 2025.

The core PCE price index — Fed's favorite gauge for inflation — will rise to 2.8% in 2021 compared with the Fed's estimate of 3.1%. The CBO said that the unemployment rate will fall to 4% in 2022. Notably, on Jun 16, the Fed raised the GDP growth rate for 2021 to 7% from 6.5% in March. The Fed reaffirmed that the unemployment rate will come down to 4.5% at the end of 2021.

U.S. stock markets are set to continue their strong performance on the back of solid consumer and business confidence, solid improvement in GDP growth, and corporate profits.

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 or 2: 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 42.

Here we present five out of those 42 stocks:

Apollo Medical Holdings Inc. (AMEH - Free Report) is a physician-centric technology-powered healthcare management company offering medical care services like integrated care, inpatient and physician alignment solutions.

The company’s stock price has soared 79.9% in the past four weeks. It has an expected earnings growth rate of 26.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 20.8% over the last 60 days.

Atento S.A. (ATTO - Free Report) provides customer relationship management, and business process outsourcing services and solutions in Brazil, the Americas, Europe, the Middle East, and Africa. It offers a range of front and back-end services, including sales, customer care, technical support, collections, and back office, as well as applications-processing and credit-management.

The stock price has climbed 22.6% 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 60 days.

Grindrod Shipping Holdings Ltd. (GRIN - Free Report) is an international shipping company that owns, charters-in, and operates a fleet of dry bulk carriers and tankers worldwide.

The stock price has climbed 25.5% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 7 days.

NIKE Inc. (NKE - Free Report) is engaged in the business of designing, developing and marketing athletic footwear, apparel, equipment and accessories, and services for men, women and children worldwide.

The stock price has rallied 19.4% in the past four weeks. The company has an expected earnings growth rate of 18.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.4% over the last 7 days.

NVIDIA Corp. (NVDA - Free Report) is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, the company’s focus has evolved from PC graphics to AI- based solutions that now support high-performance computing, gaming and virtual reality platforms.

The stock price has surged 16.6% in the past four weeks. The company has an expected earnings growth rate of 59% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings has improved 0.4% 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.