Investors are facing turbulent times on Wall Street as Russia continues to wage war on Ukraine. In fact, the market has been reeling under severe volatility since the beginning of 2022, with the S&P 500 down more than 10% year to date.
In addition to the ramifications of the ongoing Russia-Ukraine geopolitical conflict in the form of a further deterioration of the already-devasted global supply-chain system and skyrocketing commodity prices, market watchers remain wary of galloping inflation and the start of a higher interest regime. The resurgence of new coronavirus cases in China also unnerved investors. For those who might want to stay exposed to the market even during this challenging phase, it is time to focus on good investment opportunities. One of the ways such potential plays could be identified is to look for signs of relative price strength. Relative Price Strength Strategy
Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.
Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it. However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures that you have a winning option on your hands. Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 for 1 to 3 months at least and having solid fundamentals indicate room for growth and are the best ways to go about this strategy. Finally, it is crucial to find out whether analysts are optimistic about the upcoming earnings of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains. Screening Parameters Relative % Price change – 12 weeks greater than 0 Relative % Price change – 4 weeks greater than 0 Relative % Price change – 1 week greater than 0 (We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, four weeks and one week.) % Change (Q1) Est. over 4 Weeks greater than 0: Positive current-quarter estimate revisions over the last four weeks. Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks — that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years — can get through. You can see . the complete list of today’s Zacks #1 Rank stocks here Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential. VGM Score less than or equal to B: Here are five of the 11 stocks that made it through the screen: AdvanSix Inc. ( ASIX Quick Quote ASIX - Free Report) : This Parsippany, NJ-based firm is a leading developer and producer of nylon resin products and other additives used to produce engineered plastics, fibers, filaments and films. AdvanSix has a VGM Score of A. For 2022, ASIX has a projected earnings growth rate of 30.6%. Valued at around $1.4 billion, ASIX shares have gained around 79% in a year. Hertz Global Holdings, Inc. ( HTZ Quick Quote HTZ - Free Report) : The company engages in the business of rent-a-car services worldwide. Hertz Global has a VGM Score of A. Over the past 30 days, Estero, FL-based HTZ saw the Zacks Consensus Estimate for 2022 move up 40.8%. Hertz Global beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 102.6%. Valued at around $9.2 billion, HTZ has lost some 8% in a year. Nutrien Ltd. ( NTR Quick Quote NTR - Free Report) : Nutrien is a leading integrated provider of crop inputs and services. The 2022 Zacks Consensus Estimate for this Saskatoon, Canada-based firm indicates 88.8% year-over-year earnings per share growth. NTR has a VGM Score of A. Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 60.3%, on average. NTR shares have rallied around 70.3% in a year. Ryder System, Inc. ( R Quick Quote R - Free Report) : Founded in 1933 and headquartered in Miami, FL, Ryder System is recognized as one of the world's largest providers of integrated logistics and transportation solutions. R has a VGM Score of A. Notably, Ryder System International beat the Zacks Consensus Estimate for earnings in each of the last four quarters. R has a trailing four-quarter earnings surprise of roughly 57.5%, on average. The company’s shares have increased around 7.3% in a year. Tecnoglass, Inc. ( TGLS Quick Quote TGLS - Free Report) : Tecnoglass, based in Barranquilla, Colombia, is a producer of high-spec architectural glass and windows for nonresidential and residential (8% of sales) buildings, with the majority of its sales generated in the United States. The company’s expected EPS growth rate for three to five years is currently 20%, which compares favorably with the industry's growth rate of 12.7%. TGLS has a VGM Score of A. Notably, Tecnoglass beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 39.9%, on average. TGLS shares have gained around 124.7% in a year.
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.