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Zacks.com featured highlights include Intel, U.S. Cellular and Huron Consulting Group
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For Immediate Release
Chicago, IL – December 12, 2023 – Stocks in this week’s article are Intel Corp. (INTC - Free Report) , U.S. Cellular Corp. (USM - Free Report) and Huron Consulting Group Inc. (HURN - Free Report) .
3 Momentum Anomaly Picks as Markets Peak on Benign Inflation
The U.S. equity markets hit a 52-week high last week, as a benign inflation outlook and solid jobs data portrayed the resilience in the economy and pushed the stocks up. The uptrend was further buoyed by broad-based expectations that the central bank will not raise interest rates at its December meeting while trimming the same as early as next spring.
Since its inception in March 2022, the Federal Reserve has executed a series of 11 interest rate hikes to tame inflation, taking the central bank's benchmark borrowing rate up 5.25 percentage points to its highest level in more than 22 years. In its last policy meeting, the Fed also indicated that more groundwork was due to be done to bring down inflation to the targeted levels of 2% and that the monetary policy would be kept restrictive to achieve this goal.
However, the latest University of Michigan consumer sentiment survey revealed that the one-year outlook for the inflation rate slid to 3.1%, down sharply from 4.5% in November and the lowest since March 2021. The November non-farm payrolls report further showed that the jobless rate fell to 3.7% from 3.9% in the prior month. The economy also added 199,000 jobs compared with 150,000 job additions in October, signifying economic strength.
Investors will aim to look for more clarity regarding the near-term interest rate policy in the imminent Fed meeting slated to begin this Wednesday. With looming uncertainty, investors often seek to employ time-tested winning strategies to fetch sustained profits. One of the most successful game plans to beat the blues is to bet on momentum stocks when value or growth investing fails to generate the desired profits.
This approach primarily tends to follow the adage, "the trend is your friend." At its core, momentum investing is "buying high and selling higher." It is based on the idea that once a stock establishes a trend, it is more likely to continue in that direction because of the momentum that is already behind it. But before we delve deep into it, let us try to fathom why does the momentum strategy at all work?
There are several behavioral biases that most investors exhibit in their decision-making. And these emotional responses, or rather mistakes, make the momentum strategy work.
For example, some investors are anxious about booking losses and hence hold on to losing stocks for too long, hopeful of a rebound in prices. On the other hand, a few investors sell their winners way too early. Momentum investing is one of the best strategies to avoid making such errors in judgment.
Furthermore, investors initially tend to underreact to news, events or data releases. However, once things become clear, they have a habit of going with the flow and overreacting, causing dramatic price reactions. These behavioral problems extend trends, thus opening up huge opportunities for momentum players.
To sum up, momentum investing is a way to profit from the general human tendency to extrapolate current trends into the future. It is based on that gap in time before the mean reversion occurs, i.e., before prices become rational again.
In this context, stocks like Intel Corp., U.S. Cellular Corp. and Huron Consulting Group Inc. are worth betting on.
Momentum strategies have been known to be alpha-generative over a long period and across market stages. So, this strategy is quite tricky to implement, as detecting these trends is no child's play.
Here, we have created a strategy to help investors get in on these fast movers and rake in handsome gains. Our screen will help you benefit from both long-term price momentum and a short-term pullback in price.
Here are three stocks out of seven that made it through this screen:
Santa Clara, CA-based Intel is reportedly the world's largest semiconductor company and primary supplier of microprocessors and chipsets. It is gradually reducing its dependence on the PC-centric unit by moving into data-centric businesses — such as AI and autonomous driving. The stock has gained 48.8% in the past year but declined 2.4% in the past week. Intel has a Momentum Score of A.
Headquartered in Chicago, IL, U.S. Cellular is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations. It is a subsidiary of Telephone and Data Systems, Inc., a diversified telecom service provider offering wireless and wireline services. The stock has appreciated 114.7% in the past year but declined 10.6% in the past week. U.S. Cellular has a Momentum Score of B.
Headquartered in Chicago, IL, Huron is a professional services firm offering consultancy services in the United States and internationally. It strives to deliver sustainable results for its clients by embracing diverse perspectives and encouraging new ideas. The stock has rallied 40.6% in the past year but declined 3.2% in the past week. Huron has a Momentum Score of B.
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 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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks.com featured highlights include Intel, U.S. Cellular and Huron Consulting Group
For Immediate Release
Chicago, IL – December 12, 2023 – Stocks in this week’s article are Intel Corp. (INTC - Free Report) , U.S. Cellular Corp. (USM - Free Report) and Huron Consulting Group Inc. (HURN - Free Report) .
3 Momentum Anomaly Picks as Markets Peak on Benign Inflation
The U.S. equity markets hit a 52-week high last week, as a benign inflation outlook and solid jobs data portrayed the resilience in the economy and pushed the stocks up. The uptrend was further buoyed by broad-based expectations that the central bank will not raise interest rates at its December meeting while trimming the same as early as next spring.
Since its inception in March 2022, the Federal Reserve has executed a series of 11 interest rate hikes to tame inflation, taking the central bank's benchmark borrowing rate up 5.25 percentage points to its highest level in more than 22 years. In its last policy meeting, the Fed also indicated that more groundwork was due to be done to bring down inflation to the targeted levels of 2% and that the monetary policy would be kept restrictive to achieve this goal.
However, the latest University of Michigan consumer sentiment survey revealed that the one-year outlook for the inflation rate slid to 3.1%, down sharply from 4.5% in November and the lowest since March 2021. The November non-farm payrolls report further showed that the jobless rate fell to 3.7% from 3.9% in the prior month. The economy also added 199,000 jobs compared with 150,000 job additions in October, signifying economic strength.
Investors will aim to look for more clarity regarding the near-term interest rate policy in the imminent Fed meeting slated to begin this Wednesday. With looming uncertainty, investors often seek to employ time-tested winning strategies to fetch sustained profits. One of the most successful game plans to beat the blues is to bet on momentum stocks when value or growth investing fails to generate the desired profits.
This approach primarily tends to follow the adage, "the trend is your friend." At its core, momentum investing is "buying high and selling higher." It is based on the idea that once a stock establishes a trend, it is more likely to continue in that direction because of the momentum that is already behind it. But before we delve deep into it, let us try to fathom why does the momentum strategy at all work?
There are several behavioral biases that most investors exhibit in their decision-making. And these emotional responses, or rather mistakes, make the momentum strategy work.
For example, some investors are anxious about booking losses and hence hold on to losing stocks for too long, hopeful of a rebound in prices. On the other hand, a few investors sell their winners way too early. Momentum investing is one of the best strategies to avoid making such errors in judgment.
Furthermore, investors initially tend to underreact to news, events or data releases. However, once things become clear, they have a habit of going with the flow and overreacting, causing dramatic price reactions. These behavioral problems extend trends, thus opening up huge opportunities for momentum players.
To sum up, momentum investing is a way to profit from the general human tendency to extrapolate current trends into the future. It is based on that gap in time before the mean reversion occurs, i.e., before prices become rational again.
In this context, stocks like Intel Corp., U.S. Cellular Corp. and Huron Consulting Group Inc. are worth betting on.
Momentum strategies have been known to be alpha-generative over a long period and across market stages. So, this strategy is quite tricky to implement, as detecting these trends is no child's play.
Here, we have created a strategy to help investors get in on these fast movers and rake in handsome gains. Our screen will help you benefit from both long-term price momentum and a short-term pullback in price.
Here are three stocks out of seven that made it through this screen:
Santa Clara, CA-based Intel is reportedly the world's largest semiconductor company and primary supplier of microprocessors and chipsets. It is gradually reducing its dependence on the PC-centric unit by moving into data-centric businesses — such as AI and autonomous driving. The stock has gained 48.8% in the past year but declined 2.4% in the past week. Intel has a Momentum Score of A.
Headquartered in Chicago, IL, U.S. Cellular is the fourth largest full-service wireless carrier in the United States. The company provides a range of wireless products and services, and a high-quality network to increase the competitiveness of local businesses and improve the efficiency of government operations. It is a subsidiary of Telephone and Data Systems, Inc., a diversified telecom service provider offering wireless and wireline services. The stock has appreciated 114.7% in the past year but declined 10.6% in the past week. U.S. Cellular has a Momentum Score of B.
Headquartered in Chicago, IL, Huron is a professional services firm offering consultancy services in the United States and internationally. It strives to deliver sustainable results for its clients by embracing diverse perspectives and encouraging new ideas. The stock has rallied 40.6% in the past year but declined 3.2% in the past week. Huron has a Momentum Score of B.
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 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.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2195992/3-momentum-anomaly-picks-as-markets-peak-on-benign-inflation
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.
About Screen of the Week
Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: https://www.zacks.com/
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.