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4 Best Breakout Stocks to Invest In for Superb Returns
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The active investing approach generally involves picking breakout stocks, or in other words, searching for stocks whose prices are fluctuating within a specific band. It’s prudent to offload the stock if it falls below the lower bound of this band. Similarly, once the stock breaks above this channel, it has all the chance of delivering strong gains.
Zeroing in on Breakout Stocks
In order to select the right breakout stock, one has to first calculate its support and resistance level. A support level is the lower bound for stock movements, while a resistance level refers to the maximum price at which it trades over a considerable period.
In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, meaning they would like to add them to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.
Has a Breakout Really Occurred?
The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.
For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the trading channel that has been established is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive at first glance.
Screening Parameters
• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases, but whose gains are not excessive.)
• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.)
• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy rated stocks can get through.)
(Stocks that move by a greater degree than the broader market but within a reasonable limit.)
• Current price less than or equal to $20 (Stocks that are reasonably priced.)
These criteria narrow down the universe of more than 7,706 stocks to only 16.
Here are four of the 16 stocks that passed the screen:
NatWest Group (NWG - Free Report) operates as a banking and financial services company. Currently, NatWest Group carries a Zacks Rank #1. NWG has an expected earnings growth rate of 35.3% for the current year.
OI Glass (OI - Free Report) is the largest manufacturer of glass containers in the world. OI Glass currently carries a Zacks Rank #1. OI has an expected earnings growth rate of nearly 23% for the current year.
OneSpaWorld (OSW - Free Report) is a provider and innovator in the fields of wellness, beauty, rejuvenation, and transformation on cruise ships and on land. Currently, OneSpaWorld carries a Zacks Rank #1. OSW has an expected earnings growth rate of 155.6% for the current year.
Alkami Technology (ALKT - Free Report) is a cloud-based digital banking solutions provider principally for U.S.-based financial institutions. Alkami Technology currently carries a Zacks Rank #2. ALKT has an expected earnings growth rate of 34.2% for the current year.
You can sign 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.
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.
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4 Best Breakout Stocks to Invest In for Superb Returns
The active investing approach generally involves picking breakout stocks, or in other words, searching for stocks whose prices are fluctuating within a specific band. It’s prudent to offload the stock if it falls below the lower bound of this band. Similarly, once the stock breaks above this channel, it has all the chance of delivering strong gains.
Zeroing in on Breakout Stocks
In order to select the right breakout stock, one has to first calculate its support and resistance level. A support level is the lower bound for stock movements, while a resistance level refers to the maximum price at which it trades over a considerable period.
In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, meaning they would like to add them to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.
Has a Breakout Really Occurred?
The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.
For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the trading channel that has been established is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive at first glance.
Screening Parameters
• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases, but whose gains are not excessive.)
• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.)
• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy rated stocks can get through.)
Whether the market is 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.
• Beta for 60 months less than or equal to 2
(Stocks that move by a greater degree than the broader market but within a reasonable limit.)
• Current price less than or equal to $20 (Stocks that are reasonably priced.)
These criteria narrow down the universe of more than 7,706 stocks to only 16.
Here are four of the 16 stocks that passed the screen:
NatWest Group (NWG - Free Report) operates as a banking and financial services company. Currently, NatWest Group carries a Zacks Rank #1. NWG has an expected earnings growth rate of 35.3% for the current year.
OI Glass (OI - Free Report) is the largest manufacturer of glass containers in the world. OI Glass currently carries a Zacks Rank #1. OI has an expected earnings growth rate of nearly 23% for the current year.
OneSpaWorld (OSW - Free Report) is a provider and innovator in the fields of wellness, beauty, rejuvenation, and transformation on cruise ships and on land. Currently, OneSpaWorld carries a Zacks Rank #1. OSW has an expected earnings growth rate of 155.6% for the current year.
Alkami Technology (ALKT - Free Report) is a cloud-based digital banking solutions provider principally for U.S.-based financial institutions. Alkami Technology currently carries a Zacks Rank #2. ALKT has an expected earnings growth rate of 34.2% for the current year.
You can sign 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