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Zacks.com featured highlights NRG Energy, SkyWest and The Andersons
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For Immediate Release
Chicago, IL – January 15, 2024 – Stocks in this week’s article are NRG Energy, Inc. (NRG - Free Report) , SkyWest, Inc. (SKYW - Free Report) and The Andersons, Inc. (ANDE - Free Report) .
Buy 3 Momentum Anomaly Stocks as Inflation Pinches the Market
In what appears to be the first major setback in 2024 for the broader equity markets, stocks mostly trended down and traded near the flat line yesterday owing to higher-than-expected inflation data. The consumer price index increased 0.3% in December month over month and 3.4% on a year-over-year basis compared with broader expectations of a 0.2% and 3.2% rise, respectively, primarily driven by higher rents and food prices. This portrays that the Federal Reserve’s efforts to slow down inflation to its 2% target will likely remain bumpy in the year ahead.
Earlier, the Fed had pledged to cut interest rates several times in 2024 owing to a decelerating inflation trend in the later stages of 2023. However, given the recent data anomaly, the Fed might revert to its rate hike policy should inflation witness an uptrend in the near future. This, in turn, signifies that the markets need to brace for intense volatility owing to tempered expectations despite a relatively healthy U.S. economy and GDP data.
The December non-farm payrolls report showed that the jobless rate held steady at 3.7%, while the economy added 216,000 jobs compared with 173,000 revised job additions in November, signifying economic strength. The latest GDP data projections also reveal that the economy is likely to grow at a healthy pace in the fourth quarter.
Amid the 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 NRG Energy, Inc., SkyWest, Inc. and The Andersons, 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 the six that made it through this screen:
Headquarters in Houston, TX, NRG Energy is engaged in the production, sale and delivery of energy and energy products and services to residential, industrial and commercial consumers in major competitive power markets in the United States. The company also provides system power, distributed generation, renewable products, backup generation, energy efficiency and advisory services, as well as carbon management and specialty services. The stock has gained 54.8% in the past year but declined 1.5% in the past week. NRG Energy has a Momentum Score of B.
Based in St. George, UT, SkyWest operates as a regional airline in the United States through its subsidiary SkyWest Airlines. It is also the holding company of an aircraft leasing company. SkyWest Airlines offers high-quality regional service to airports located primarily in the Midwestern and Western United States as well as Mexico and Canada. The carrier primarily operates from Chicago (O’Hare), Denver, Houston, Los Angeles, Minneapolis, Phoenix, Salt Lake City, San Francisco and Seattle airports. The stock has skyrocketed 146.5% in the past year but declined 2.3% in the past week. SkyWest has a Momentum Score of B.
Based in Maumee, OH, Andersons is a diversified firm rooted in agriculture that conducts business in the commodity merchandising, renewables, nutrient and industrial sectors. The company maintains grain and production facilities throughout the Midwest and six retail locations in northern and central Ohio. The stock has rallied 45.7% in the past year but declined 6.5% in the past week. Andersons 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.
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/performance for information about the performance numbers displayed in this press release.
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Zacks.com featured highlights NRG Energy, SkyWest and The Andersons
For Immediate Release
Chicago, IL – January 15, 2024 – Stocks in this week’s article are NRG Energy, Inc. (NRG - Free Report) , SkyWest, Inc. (SKYW - Free Report) and The Andersons, Inc. (ANDE - Free Report) .
Buy 3 Momentum Anomaly Stocks as Inflation Pinches the Market
In what appears to be the first major setback in 2024 for the broader equity markets, stocks mostly trended down and traded near the flat line yesterday owing to higher-than-expected inflation data. The consumer price index increased 0.3% in December month over month and 3.4% on a year-over-year basis compared with broader expectations of a 0.2% and 3.2% rise, respectively, primarily driven by higher rents and food prices. This portrays that the Federal Reserve’s efforts to slow down inflation to its 2% target will likely remain bumpy in the year ahead.
Earlier, the Fed had pledged to cut interest rates several times in 2024 owing to a decelerating inflation trend in the later stages of 2023. However, given the recent data anomaly, the Fed might revert to its rate hike policy should inflation witness an uptrend in the near future. This, in turn, signifies that the markets need to brace for intense volatility owing to tempered expectations despite a relatively healthy U.S. economy and GDP data.
The December non-farm payrolls report showed that the jobless rate held steady at 3.7%, while the economy added 216,000 jobs compared with 173,000 revised job additions in November, signifying economic strength. The latest GDP data projections also reveal that the economy is likely to grow at a healthy pace in the fourth quarter.
Amid the 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 NRG Energy, Inc., SkyWest, Inc. and The Andersons, 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 the six that made it through this screen:
Headquarters in Houston, TX, NRG Energy is engaged in the production, sale and delivery of energy and energy products and services to residential, industrial and commercial consumers in major competitive power markets in the United States. The company also provides system power, distributed generation, renewable products, backup generation, energy efficiency and advisory services, as well as carbon management and specialty services. The stock has gained 54.8% in the past year but declined 1.5% in the past week. NRG Energy has a Momentum Score of B.
Based in St. George, UT, SkyWest operates as a regional airline in the United States through its subsidiary SkyWest Airlines. It is also the holding company of an aircraft leasing company. SkyWest Airlines offers high-quality regional service to airports located primarily in the Midwestern and Western United States as well as Mexico and Canada. The carrier primarily operates from Chicago (O’Hare), Denver, Houston, Los Angeles, Minneapolis, Phoenix, Salt Lake City, San Francisco and Seattle airports. The stock has skyrocketed 146.5% in the past year but declined 2.3% in the past week. SkyWest has a Momentum Score of B.
Based in Maumee, OH, Andersons is a diversified firm rooted in agriculture that conducts business in the commodity merchandising, renewables, nutrient and industrial sectors. The company maintains grain and production facilities throughout the Midwest and six retail locations in northern and central Ohio. The stock has rallied 45.7% in the past year but declined 6.5% in the past week. Andersons 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/2209363/buy-3-momentum-anomaly-stocks-as-inflation-pinches-market
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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/performance for information about the performance numbers displayed in this press release.