Being an individual investor is hard. There are stocks moving up and down every day. And while the buy-the-dip investing strategy has been popular of late, there’s also a theory that when a stock touches a new high, it is set to move higher. All of this can be hard to figure out.

The way to make sense of this involves taking a step-by-step approach. And the first step is to try and identify the reason for a stock movement. Now, this may be easier said than done because there could be any number of reasons.

For example, the stock could be moving up because there is some market-driven factor that is pushing up all stocks. And it is just rising with the tide. And similarly for the reverse movement. So when the government was pumping free money into the economy, more people were investing in stocks, which sent markets higher.

Similarly, when the market became overheated, everyone was looking for a correction. And sure enough, the markets turned down in January. Broad concerns about inflation and the Fed raising rates (among other concerns) drove the price movement. In both cases, price movements were largely explained by economic factors. The meme stock phenomenon that saw investors artificially driving demand for heavily shorted stocks also falls in this category (although this is hard to predict and not something I would recommend given the risk involved).  

Second, the stock could be moving up because the industry to which it belongs has some compelling drivers that are positive for each individual player. The current energy crisis being positive for petroleum stocks is an example. There could also be positive developments in a related industry that turn out to be positive for the one being considered. For instance, the oil crunch has been positive for coal, despite the fact that most coal producers have been cutting capacity as the world moves to cleaner energy.

Then of course there could be company-specific reasons that drive up growth expectations. This is a long list and could include things like solid innovation, competitive advantages, market share, brand value, and so forth.

At any given time, movement in a stock’s price is likely to be driven by a combination of these factors. Obviously, the factors most closely related to an individual stock are the ones easier to study. What’s more, these are the factors that have a longer-term bearing on the stock’s price.

That means, if your investment in a stock is based on its fundamental strengths, you will gain in the long run even if immediate market conditions aren’t supportive.

In general, though, the close industry group to which a stock belongs also has a strong bearing on its prospects. Therefore, choosing stocks in attractive industries generally pays off. At Zacks, each of these industries is allotted a rank, so it’s fairly easy to pick them. And when a stock that belongs to a high-ranking industry, also has a Zacks #1 (Strong Buy) or #2 (Buy) rating, the chances of picking a winner increases all the more.   

The point is, we shouldn’t react to price movement and simply jump into any stock without checking out if there are other good reasons to invest. Particularly when holding cash is not as bad as it used to be.

Now let’s take a look at a few stocks that popped last week-

Cal-Maine Foods, Inc. (CALM Quick QuoteCALM - Free Report)

Cal-Maine is primarily engaged in the production, grading, packing and sale of fresh shell eggs, including conventional, cage-free, organic and nutritionally-enhanced egs. It is the largest producer and distributor of fresh shell eggs in the United States with operations across the southwestern, southeastern, mid-western and mid-Atlantic regions.

Cal-Maine belongs to the Agriculture – Products industry, which is in the top 21% of Zacks-ranked industries.

Analysts expect Cal-Maine to grow its earnings 3,550% in its fiscal year 2022, which ends in May. But the strength is expected to continue next year, with earnings growing 85.6%.

Analysts have raised the company’s 2022 estimate by 71 cents (48.6%) in the last 7 days. Estimates are up 78 cents in the last 30 days. The 2023 estimate is up $1.71 (171%) in the last 7 days.

As a result, the shares carry a Zacks Rank #2 and VGM Score B.

So when a company like Cal-Maine sees a 10.4% price increase in a single week, and that too in the week that also saw such notable estimate revisions, we may surmise that the stock is likely to move higher. Which makes it a good pick.

PBF Energy Inc. (PBF Quick QuotePBF - Free Report)

PBF Energy is a leading refiner of crude. Through five oil refineries and associated infrastructure in the United States, the company provides end products like heating oil, transportation fuels, lubricants and related products. The refineries can collectively process 900,000 barrels of crude every day.

PBF belongs to the Oil and Gas - Refining and Marketing industry (top 32%).

Both 2022 and 2023 estimates are up substantially in the last 30 days. The 2022 estimate is up 55 cents (39.3%). The 2023 estimate is up 22 cents (14.5%).  Analysts currently expect 2022 earnings to grow 178%.

The Zacks Rank #1 stock with VGM Score A has appreciated 13.5% in the past week. And there should be further growth, fueled by price increases

Haynes International, Inc. (HAYN Quick QuoteHAYN - Free Report)

Haynes is a technology-oriented company devoted primarily to the development and manufacture of high-performance nickel- and cobalt-based alloys for service in severe corrosion and high-temperature applications. Superior customer service and technical support are provided worldwide by well-trained professionals within the company. Haynes' service centers and affiliates have available in-stock sheet, plate, bar, wire, tubing, forging stock, fittings, and flanges.

Haynes belongs to the Steel – Speciality industry, which is the top 1% of Zacks-classified industries.

The lone analyst providing estimates on this stock has turned extremely bullish in the last 7 days. And for the current year ending in September, his estimate has increased 65 cents (30.9%). The 2023 estimate increased $1.25 (45.5%). The numbers represent earnings growth of 487.3% in 2022 and 45.5% in 2023.

Given the above, Haynes shares have been allotted a Zacks Rank #1 (Strong Buy).

The 5.6% appreciation in Haynes shares over the past week represents a positive trend worth buying into.

Nexa Resources (NEXA Quick QuoteNEXA - Free Report)

Nexa Resources S.A. is an integrated zinc producer with mining and smelting assets primarily in Latin America. The company operates principally in the Central Andes of Peru and in the state of Minas Gerais in Brazil.

The Mining – Miscellaneous industry to which it belongs is in the top 28% of Zacks-classified industries.

Analysts are optimistic about Nexa’s prospects. So they have substantially raised their estimates for 2022 and 2023. This year’s estimate is up 39 cents (19.8%) in the last 30 days. Next year’s estimate is up 42 cents (31.6%). Its 2022 earnings growth is currently estimates to be 174.4%.

The Zacks Rank #1 stock is up 5.9% in the past week. And considering the growth potential, they is worth buying.

The Mosaic Company (MOS Quick QuoteMOS - Free Report)

The Mosaic Company is a leading producer and marketer of concentrated phosphate and potash for the global agriculture industry.

It is part of the Fertilizers industry (top 2% of Zacks-classified industries).

Analysts have raised their estimates for Mosaic’s earnings. For 2022, they now expect earnings of $11.34, which is a $1.02 (9.9%) increase from 30 days ago. For 2023, they expect earnings of $8.79, which although a reduction from 2022 levels, is up from the previous estimate of $6.56 just 30 days ago. The expected growth for 2022 is 125% while the decline in 2023 is moderate at 22.4% and may end up being much better, as is often the case.

Given the above, Mosaic shares may be considered attractive with the 5.1% appreciation in the prior week being a trend worth buying into.

3-Month Price Movement

Image Source: Zacks Investment Research