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Hostess Brands (TWNK) Soars 6.7%: Is Further Upside Left in the Stock?

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Hostess Brands (TWNK - Free Report) shares ended the last trading session 6.7% higher at $20.51. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 6.1% loss over the past four weeks.

Shares of Hostess Brands rallied on news that the company will be added to S&P SmallCap 600 index. Per a report from S&P Dow Jones Indices, Hostess Brands will be added to the index effective Feb 1, 2022. Reportedly, Hostess Brands will replace Watts Water Technologies Inc. (WTS - Free Report) in the S&P SmallCap 600.

This company is expected to post quarterly earnings of $0.23 per share in its upcoming report, which represents a year-over-year change of +9.5%. Revenues are expected to be $282.25 million, up 10.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Hostess Brands, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on TWNK going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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