The free fall of the U.S. stock markets, since the beginning of this year continues as we approach the end of first-half 2022. Investors are highly concerned about soaring inflation and the Fed’s tighter-than-expected monetary policies.
Market participants are facing the real effect of the pandemic as the impact of coronavirus and its variants on daily activities is now much less. As real-life activities are returning to normalcy and fiscal and monetary stimuli have stopped, the pain of the pandemic is being felt by investors.
The Nasdaq Composite has been in the bear market since Mar 7. The S&P 500 entered the bear market on Jun 13. The Dow is knocking on the same door, while the small-cap benchmark Russell 2000 has also entered the bear market.
However, in line with Wall Street’s steady decline, the valuation of most of the stocks, irrespective of market capitalization, sector and industry, has corrected significantly. U.S. stocks are no longer overvalued. Although we are not expecting a rebound from the current bear market anytime soon, a pullback — popularly known as a bear market rally — is long overdue.
Although we are not expecting a rebound from the current bear market anytime soon, a pullback — popularly known as a bear market rally — is long overdue. A handful of stocks have shown price strength recently.
These stocks are likely to gain in the near term.if they tap the expected rally. Five of them are —
Immunocore Holdings plc ( IMCR Quick Quote IMCR - Free Report) , United Fire Group Inc. ( UFCS Quick Quote UFCS - Free Report) , FTI Consulting Inc. ( FCN Quick Quote FCN - Free Report) , Consolidated Water Co. Ltd. ( CWCO Quick Quote CWCO - Free Report) and Huron Consulting Group Inc. ( HURN Quick Quote HURN - Free Report) . Here’s How We Arrived at the Picks
We have primarily targeted stocks that have freshly been on a bull run. 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 it would have probably crashed. So, looking at stocks capable of beating the benchmark that they have set for themselves seems rational. However, recent price strength alone cannot create magic. Therefore, other relevant parameters are needed 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 or 2: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (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 narrowed down the search from over 7,700 stocks to a mere eight. Let’s discuss five out of these eight stocks: Immunocore is a commercial-stage biotechnology company, engages in the development of immunotherapies for the treatment of cancer, infectious, and autoimmune diseases. IMCR is engaged in the development of a novel class of T cell receptor bispecific immunotherapies.
The stock price of Immunocore has soared 37.4% in the past four weeks. IMCR has an expected earnings growth rate of 33.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 34.1% over the last 60 days.
United Fire Group is engaged in the business of writing property, casualty, and life insurances. UFCS’ products include commercial insurance, personal insurance, life insurance and surety bonds. United Fire Group also underwrites and brokers a limited amount of excess and surplus lines insurance.
The stock price of UFCS has climbed 10.8% in the past four weeks. United Fire Group has an expected earnings growth rate of 46.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 23.5% over the last 30 days.
FTI Consulting is a global business advisory firm aimed at helping organizations manage change, mitigate risk and resolve financial, legal, operational, political and regulatory, reputational and transactional disputes.
FCN has a team of highly qualified professionals, who provide problem-solving and technology services primarily to major corporations, financial institutions and law firms. FTI Consulting’s five main business segments include Corporate Finance and Restructuring, Forensic and Litigation Consulting, Strategic Communications, Technology, and Economic Consulting.
The stock price of FTI Consulting has advanced 5.1% in the past four weeks. FCN has an expected earnings growth rate of 1.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the last 60 days.
Consolidated Water is involved in the development and operation of seawater desalination plants and water distribution systems in areas where naturally occurring supplies of potable water are scarce or nonexistent. CWCO also focuses on expanding operation in areas having a large proportion of tourist properties and growing population. Consolidated Water has four business segments, Retail, Bulk, Services and Manufacturing.
The stock price of CWCO has gained 4.9% in the past four weeks. Consolidated Water has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 26.4% over the last 60 days.
Huron Consulting is a professional services firm, providing advisory, technology, and analytic solutions in the United States and internationally. HURN’s experienced and credentialed professionals employ their expertise in accounting, finance, economics and operations to a wide variety of both financially sound and distressed organizations as well as, leading academic institutions, healthcare organizations and law firms.
The stock price of Huron Consulting has risen 4.5% in the past four weeks. HURN has an expected earnings growth rate of 22.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.3% over the last 60 days.
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. 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