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URBN, PAHC and STRT meet momentum criteria with positive trends in price and strong EPS growth.
Each stock has outpaced earnings estimates, with STRT posting a 195.8% average surprise over four quarters.
URBN and PAHC hold Momentum Score of A and B, respectively, signaling continued price strength.
Wall Street may encounter volatility as trade tensions between the United States and China reignite. The United States blamed China for breaching a temporary trade deal, while Beijing accused Washington of failing to support the agreement, a telltale sign that negotiations between the countries have soured.
In this uncertain situation, it’s challenging to find stocks with strong uptrends, as they are mostly showing modest gains. However, by applying Richard Driehaus’s investment strategy, better known as the “buy high and sell higher” theory, one can discover stocks displaying positive momentum. To that end, Urban Outfitters, Inc. (URBN - Free Report) , Phibro Animal Health Corporation (PAHC - Free Report) and Strattec Security Corporation (STRT - Free Report) are demonstrating positive momentum and defying gyrations in the broader market.
A Detailed Look Into the Driehaus Strategy
Regarding the strategy, Driehaus once said, “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in decline and try to guess when it will turn around.” In line with this insight, the American.
The Association of Individual Investors (“AAII”) considered the percentage 50-day moving average as one of the key criteria before creating a portfolio following Driehaus’ philosophy.
It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator — positive relative strength — has also been included in this strategy. A positive percentage 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.
Moreover, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was made to provide better returns over the long term.
Screening Parameters Using Research Wizard:
To make the strategy more profitable, we have considered only those stocks that have a Zacks Rank #1 (Strong Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Strong EPS growth history ensures an improving business
• Trailing 12-month EPS growth greater than 0 and industry median
Higher EPS growth compared to the industry average indicates superior earnings performance
• Last four-quarter average EPS surprise greater than 5%
Solid EPS surprise history indicates better price performance
• Positive percentage change in 50-day moving average and relative strength over 4 weeks
Positive percentage change in the 50-day moving average and the relative strength signal uptrend
• Momentum Score equal to or less than B
A favorable momentum score indicates that it is ideal for taking advantage of the momentum with the highest probability of success.
These few parameters have narrowed the universe of more than 7,743 stocks to only six.
Here are three of the six stocks:
Urban Outfitters
Urban Outfitters offers lifestyle products and services. Urban Outfitters has a Momentum Score of A. The trailing four-quarter earnings surprise for URBN is 29%, on average.
Phibro Animal Health
Phibro Animal Health is an animal health and mineral nutrition company with operations in the United States, Israel, Brazil, Ireland and internationally. Phibro Animal Health has a Momentum Score of B. The trailing four-quarter earnings surprise for PAHC is 30.6%, on average.
Strattec Security
Strattec Security primarily markets automotive security and access control products under the VAST Automotive Group brand in North America. Strattec Security has a Momentum Score of B. The trailing four-quarter earnings surprise for STRT is 195.8%, on average.
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
3 Stocks Showing Positive Momentum Despite Trade Tensions
Key Takeaways
Wall Street may encounter volatility as trade tensions between the United States and China reignite. The United States blamed China for breaching a temporary trade deal, while Beijing accused Washington of failing to support the agreement, a telltale sign that negotiations between the countries have soured.
In this uncertain situation, it’s challenging to find stocks with strong uptrends, as they are mostly showing modest gains. However, by applying Richard Driehaus’s investment strategy, better known as the “buy high and sell higher” theory, one can discover stocks displaying positive momentum. To that end, Urban Outfitters, Inc. (URBN - Free Report) , Phibro Animal Health Corporation (PAHC - Free Report) and Strattec Security Corporation (STRT - Free Report) are demonstrating positive momentum and defying gyrations in the broader market.
A Detailed Look Into the Driehaus Strategy
Regarding the strategy, Driehaus once said, “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in decline and try to guess when it will turn around.” In line with this insight, the American.
The Association of Individual Investors (“AAII”) considered the percentage 50-day moving average as one of the key criteria before creating a portfolio following Driehaus’ philosophy.
It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator — positive relative strength — has also been included in this strategy. A positive percentage 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.
Moreover, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was made to provide better returns over the long term.
Screening Parameters Using Research Wizard:
To make the strategy more profitable, we have considered only those stocks that have a Zacks Rank #1 (Strong Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
• Zacks Rank equal to #1
Whether the market is good or bad, stocks with a Zacks Rank #1 have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
• Last 5-year average EPS growth rates above 2%
Strong EPS growth history ensures an improving business
• Trailing 12-month EPS growth greater than 0 and industry median
Higher EPS growth compared to the industry average indicates superior earnings performance
• Last four-quarter average EPS surprise greater than 5%
Solid EPS surprise history indicates better price performance
• Positive percentage change in 50-day moving average and relative strength over 4 weeks
Positive percentage change in the 50-day moving average and the relative strength signal uptrend
• Momentum Score equal to or less than B
A favorable momentum score indicates that it is ideal for taking advantage of the momentum with the highest probability of success.
These few parameters have narrowed the universe of more than 7,743 stocks to only six.
Here are three of the six stocks:
Urban Outfitters
Urban Outfitters offers lifestyle products and services. Urban Outfitters has a Momentum Score of A. The trailing four-quarter earnings surprise for URBN is 29%, on average.
Phibro Animal Health
Phibro Animal Health is an animal health and mineral nutrition company with operations in the United States, Israel, Brazil, Ireland and internationally. Phibro Animal Health has a Momentum Score of B. The trailing four-quarter earnings surprise for PAHC is 30.6%, on average.
Strattec Security
Strattec Security primarily markets automotive security and access control products under the VAST Automotive Group brand in North America. Strattec Security has a Momentum Score of B. The trailing four-quarter earnings surprise for STRT is 195.8%, on average.
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.