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5 Solid Relative Price Strength Opportunities for Investors
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After a disappointing 2022, Wall Street is experiencing a robust 2023, marked by an impressive bull run, with the S&P 500 surging nearly 20% year to date. In particular, the month of November has seen a resurgence, giving confidence to investors who anticipate the end of the Federal Reserve's interest rate hike cycle.
The prevailing sentiment suggests a reduced fear of a 2024 recession, with expectations leaning toward the Fed making its first rate cut in the first half of 2024. Strengthened by a resilient U.S. economy and diminishing inflation, the conditions seem conducive to the Fed's envisioned soft landing, potentially setting the stage for a year-end rally. In this optimistic scenario, savvy investors are focusing on relative price performance, strategically identifying and investing in promising opportunities for accelerated returns.
Relative Price Strength Strategy
Earnings growth and valuation multiples are indeed important for investors to determine a stock's ability to offer considerable returns. But these are also essential for determining whether a stock’s price performance is better than its peers or the industry average.
If a stock’s performance is lacking that of the broader groups, despite impressive earnings growth or valuation multiples, then something must be wrong.
It’s always advisable to stay away from these stocks and bet on those that are outperforming their respective industry or benchmark. This is because betting on a winner always proves to be lucrative.
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.
VGM Score less than or equal to B: 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.
Here are five of the 14 stocks that made it through the screen:
Cellebrite Dl Ltd. (CLBT - Free Report) : Based in Israel, the company is a digital forensic solutions provider. Cellebrite’s expected EPS growth rate for three to five years is currently 49.4%, which compares favorably with the industry's growth rate of 18.5%. The company has a VGM Score of B.
Notably, the 2023 Zacks Consensus Estimate for Cellebrite indicates 150% year-over-year earnings per share growth. The company has a market capitalization of $1.7 billion. CLBT shares have gone up 83.2% in a year.
BrainsWay Ltd. (BWAY - Free Report) : It is a niche industry operator, involved in the shooting of magnetic waves for brain therapies. The 2023 Zacks Consensus Estimate for this firm indicates 37.50% year-over-year earnings per share growth. With offices in Burlington, MA and Jerusalem, Israel, BWAY has a VGM Score of B.
BrainsWay beat the Zacks Consensus Estimate for earnings in three of the last four quarters and met in the other. It has a trailing four-quarter earnings surprise of roughly 49.5%, on average. BWAY shares have skyrocketed 176.9% in a year.
Carrols Restaurant Group (TAST - Free Report) : Based in Syracuse, NY, the company operates around 1,100 quick-serve restaurants, primarily under the Burger King banner. Over the past 60 days, Carrols Restaurant Group saw the Zacks Consensus Estimate for 2023 move up 13.5%. TAST has a VGM Score of A.
The 2023 Zacks Consensus Estimate for Carrols Restaurant Group indicates 160% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 102%, on average. TAST shares have surged 394.8% in a year.
Royal Caribbean Group (RCL - Free Report) : It is a cruise company whose brands primarily serve the contemporary, premium and deluxe segments. The 2023 Zacks Consensus Estimate for Miami, FL-based RCL indicates 187.8% year-over-year earnings per share growth. Royal Caribbean Group has a VGM Score of B.
Over the past 60 days, RCL saw the Zacks Consensus Estimate for 2023 move up 7.3%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 28.3%. Royal Caribbean Group shares have moved up 76.9% in a year.
Global Industrial Company (GIC - Free Report) : The firm provides industrial, operational and repair items, which are distributed through its robust e-commerce operation and sales personnel. Over the past 60 days, this Port Washington, NY-based firm has seen the Zacks Consensus Estimate for 2023 move up 2.8%. GIC has a VGM Score of A.
Global Industrial Company beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 8.6%, on average. GIC shares have gained 46.8% 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.
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.
Image: Bigstock
5 Solid Relative Price Strength Opportunities for Investors
After a disappointing 2022, Wall Street is experiencing a robust 2023, marked by an impressive bull run, with the S&P 500 surging nearly 20% year to date. In particular, the month of November has seen a resurgence, giving confidence to investors who anticipate the end of the Federal Reserve's interest rate hike cycle.
The prevailing sentiment suggests a reduced fear of a 2024 recession, with expectations leaning toward the Fed making its first rate cut in the first half of 2024. Strengthened by a resilient U.S. economy and diminishing inflation, the conditions seem conducive to the Fed's envisioned soft landing, potentially setting the stage for a year-end rally. In this optimistic scenario, savvy investors are focusing on relative price performance, strategically identifying and investing in promising opportunities for accelerated returns.
Relative Price Strength Strategy
Earnings growth and valuation multiples are indeed important for investors to determine a stock's ability to offer considerable returns. But these are also essential for determining whether a stock’s price performance is better than its peers or the industry average.
If a stock’s performance is lacking that of the broader groups, despite impressive earnings growth or valuation multiples, then something must be wrong.
It’s always advisable to stay away from these stocks and bet on those that are outperforming their respective industry or benchmark. This is because betting on a winner always proves to be lucrative.
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.
VGM Score less than or equal to B: 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.
Here are five of the 14 stocks that made it through the screen:
Cellebrite Dl Ltd. (CLBT - Free Report) : Based in Israel, the company is a digital forensic solutions provider. Cellebrite’s expected EPS growth rate for three to five years is currently 49.4%, which compares favorably with the industry's growth rate of 18.5%. The company has a VGM Score of B.
Notably, the 2023 Zacks Consensus Estimate for Cellebrite indicates 150% year-over-year earnings per share growth. The company has a market capitalization of $1.7 billion. CLBT shares have gone up 83.2% in a year.
BrainsWay Ltd. (BWAY - Free Report) : It is a niche industry operator, involved in the shooting of magnetic waves for brain therapies. The 2023 Zacks Consensus Estimate for this firm indicates 37.50% year-over-year earnings per share growth. With offices in Burlington, MA and Jerusalem, Israel, BWAY has a VGM Score of B.
BrainsWay beat the Zacks Consensus Estimate for earnings in three of the last four quarters and met in the other. It has a trailing four-quarter earnings surprise of roughly 49.5%, on average. BWAY shares have skyrocketed 176.9% in a year.
Carrols Restaurant Group (TAST - Free Report) : Based in Syracuse, NY, the company operates around 1,100 quick-serve restaurants, primarily under the Burger King banner. Over the past 60 days, Carrols Restaurant Group saw the Zacks Consensus Estimate for 2023 move up 13.5%. TAST has a VGM Score of A.
The 2023 Zacks Consensus Estimate for Carrols Restaurant Group indicates 160% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 102%, on average. TAST shares have surged 394.8% in a year.
Royal Caribbean Group (RCL - Free Report) : It is a cruise company whose brands primarily serve the contemporary, premium and deluxe segments. The 2023 Zacks Consensus Estimate for Miami, FL-based RCL indicates 187.8% year-over-year earnings per share growth. Royal Caribbean Group has a VGM Score of B.
Over the past 60 days, RCL saw the Zacks Consensus Estimate for 2023 move up 7.3%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 28.3%. Royal Caribbean Group shares have moved up 76.9% in a year.
Global Industrial Company (GIC - Free Report) : The firm provides industrial, operational and repair items, which are distributed through its robust e-commerce operation and sales personnel. Over the past 60 days, this Port Washington, NY-based firm has seen the Zacks Consensus Estimate for 2023 move up 2.8%. GIC has a VGM Score of A.
Global Industrial Company beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 8.6%, on average. GIC shares have gained 46.8% 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.