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The new administration’s optimism over the longevity of the eight-year long Bull Market, the impressive rally of all the major indices over the past six months and overall positive economic indicators, encourage us to believe it is the right time to go by the momentum investing rulebook.
The momentum investment strategy tends to bet on high-flying stocks in a bull phase. In this screening article, we focus on the 52-week investment strategy, which loosely borrows from the basics of momentum investing.
Being one of the relatively new investment techniques, the 52-week investment strategy wagers on Wall Street’s current favorite catchphrase “buy high and sell higher.” Though skeptics may raise a brow on the mettle of this approach, a certain degree of caution is needed to avoid the pitfalls.
Rely on our screener to stop chasing fads blindly! Let’s take a look at how you could club these stocks with the right set of parameters to turn the tide in your favor.
Crossing the 52-Week High Mark
Many a times, stocks nearing 52-week highs are prevented from scaling higher despite robust potential. Psychological bias on part of investors, who fear that the stocks are overvalued and a price crash is impending, prevents them from scaling higher. These investors use the 52-week high price as a reference point and value stocks against this anchor.
Prolonged under reaction makes these stocks remain undervalued. However, sooner or later, the markets get a whiff of it and investors realize that their lack of enthusiasm is unwarranted. A string of positive developmentsand renewed interest in stocks help them steer past the 52-week high bar and continue to scale higher.
The ones who get in before the positive developments and growth drivers are priced in benefit the most. Also, contemporary research reveals that the current price levels reflect a stock’s momentum better than past changes. This implies that if a stock is trading close to its 52-week high, chances are that it will perform better in subsequent periods.
Setting the Right Filters
Our diligent screening technique has been deployed to find 52-week high stocks that hold tremendous potential compared to their respective industries. The added parameters are strong earnings growth expectations, sturdy value metrics and positive price momentum.
These stocks are relatively undervalued compared to their peers, in terms of earnings as well as sales, which make us believe that they will continue their rally for quite some time.
Current Price/52 Week High >= .80
This simply is the ratio between the current price and the highest price at which the stock has traded in the past 52 weeks. A value greater than 0.8 implies that the stock is trading within 20% of its 52-week high range and is likely to touch the 52-week high mark soon.
% Change Price – 4 Weeks > 0
It ensures that the stock price has moved north over the past four weeks.
% Change Price – 12 Weeks > 0
This metric guarantees a continued upward price momentum for the stock over the past three months as well.
Price/Sales <= XIndMed
The lower, the better.
P/E using F(1) Estimate <= XIndMed
This metric measures the amount an investor puts into a company to obtain one dollar of earnings. It narrows down the list of stocks to those that are undervalued compared to their peers.
One-Year EPS Growth F(1)/F(0) >= XIndMed
This helps choose stocks that have higher growth rates than the industry median. This is a meaningful indicator as decent earnings growth adds to investor optimism.
Zacks Rank = 1
No screening is complete without our Zacks Rank, which has proved its worth since inception. Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have at all times managed to brave adversities and beat the market. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price >= 5
This parameter will help screen stocks which are trading at $5 or higher.
Volume – 20 days (shares) >= 100000
Inclusion of this metric ensures that there is a substantial volume of shares that can be traded easily.
Here are seven of the 14 stocks that made it through the screen:
Louisiana-Pacific Corp.(LPX - Free Report) : The company, together with its subsidiaries, is engaged in manufacturing and selling of building products that are used in new home construction, repair and remodeling, outdoor structures, light industrial and commercial construction. Louisiana-Pacifichas an impressive average positive earnings surprise of 66.3% for the last four quarters.
ZAGG Inc designs, manufactures, and distributes mobile tech accessories for smartphones and tablets. This company’s flagship brand, the invisibleSHIELD, is a protective, high-tech patented film covering, designed for iPods, laptops, cell phones, digital cameras, PDAs, watch faces, GPS systems, gaming devices and other items. The company has an average positive surprise of 52.1% for the trailing four quarters, beating estimates twice.
ACCO Brands Corporation (ACCO - Free Report) is a leading provider of branded office products. Headquartered in Lake Zurich, IL, the company designs, manufactures, sources, markets, and sells office products, academic supplies, and calendar products across the globe. The company has an average positive surprise of 24.7% for the trailing four quarters, registering back-to-back beats.
Tech Data Corporation is a leading provider of Internet technology products, logistics management and other value-added services. It distributes microcomputer hardware and software products to value-added resellers, corporate resellers, retailers, direct marketers and Internet resellers. The company boasts an average positive surprise of 8.7% over the trailing four quarters, having beaten estimates thrice.
Aegean Marine Petroleum Network Inc. is a marine fuel logistics company, engaged in supplying and marketing refined marine fuel and lubricants to ships in port and at sea. The company has managed to beat earnings thrice in the trailing four quarters, with an average positive surprise of 12.3%.
Headquartered in Wilmington, DE, The Chemours Company (CC - Free Report) , offers performance chemicals to clients across the globe. The company has organized its business in three segments, namely, Titanium Technologies, Fluoroproducts and Chemical Solutions. It has a whopping average positive surprise of 151.6%, with three beats over the last four quarters.
Weight Watchers International, Inc. (WTW - Free Report) offers a broad range of weight control programs. The company offers scientifically designed programs, including group support and information on healthy eating patterns, behavior modification and physical activity. With three beats over the trailing four quarters, the company has a positive average surprise of 5.7%.
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 trial to the Research Wizard 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »
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7 Stocks Near 52-Week High to Look Out For
The new administration’s optimism over the longevity of the eight-year long Bull Market, the impressive rally of all the major indices over the past six months and overall positive economic indicators, encourage us to believe it is the right time to go by the momentum investing rulebook.
The momentum investment strategy tends to bet on high-flying stocks in a bull phase. In this screening article, we focus on the 52-week investment strategy, which loosely borrows from the basics of momentum investing.
Being one of the relatively new investment techniques, the 52-week investment strategy wagers on Wall Street’s current favorite catchphrase “buy high and sell higher.” Though skeptics may raise a brow on the mettle of this approach, a certain degree of caution is needed to avoid the pitfalls.
Rely on our screener to stop chasing fads blindly! Let’s take a look at how you could club these stocks with the right set of parameters to turn the tide in your favor.
Crossing the 52-Week High Mark
Many a times, stocks nearing 52-week highs are prevented from scaling higher despite robust potential. Psychological bias on part of investors, who fear that the stocks are overvalued and a price crash is impending, prevents them from scaling higher. These investors use the 52-week high price as a reference point and value stocks against this anchor.
Prolonged under reaction makes these stocks remain undervalued. However, sooner or later, the markets get a whiff of it and investors realize that their lack of enthusiasm is unwarranted. A string of positive developmentsand renewed interest in stocks help them steer past the 52-week high bar and continue to scale higher.
The ones who get in before the positive developments and growth drivers are priced in benefit the most. Also, contemporary research reveals that the current price levels reflect a stock’s momentum better than past changes. This implies that if a stock is trading close to its 52-week high, chances are that it will perform better in subsequent periods.
Setting the Right Filters
Our diligent screening technique has been deployed to find 52-week high stocks that hold tremendous potential compared to their respective industries. The added parameters are strong earnings growth expectations, sturdy value metrics and positive price momentum.
These stocks are relatively undervalued compared to their peers, in terms of earnings as well as sales, which make us believe that they will continue their rally for quite some time.
Current Price/52 Week High >= .80
This simply is the ratio between the current price and the highest price at which the stock has traded in the past 52 weeks. A value greater than 0.8 implies that the stock is trading within 20% of its 52-week high range and is likely to touch the 52-week high mark soon.
% Change Price – 4 Weeks > 0
It ensures that the stock price has moved north over the past four weeks.
% Change Price – 12 Weeks > 0
This metric guarantees a continued upward price momentum for the stock over the past three months as well.
Price/Sales <= XIndMed
The lower, the better.
P/E using F(1) Estimate <= XIndMed
This metric measures the amount an investor puts into a company to obtain one dollar of earnings. It narrows down the list of stocks to those that are undervalued compared to their peers.
One-Year EPS Growth F(1)/F(0) >= XIndMed
This helps choose stocks that have higher growth rates than the industry median. This is a meaningful indicator as decent earnings growth adds to investor optimism.
Zacks Rank = 1
No screening is complete without our Zacks Rank, which has proved its worth since inception. Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have at all times managed to brave adversities and beat the market. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price >= 5
This parameter will help screen stocks which are trading at $5 or higher.
Volume – 20 days (shares) >= 100000
Inclusion of this metric ensures that there is a substantial volume of shares that can be traded easily.
Here are seven of the 14 stocks that made it through the screen:
Louisiana-Pacific Corp.(LPX - Free Report) : The company, together with its subsidiaries, is engaged in manufacturing and selling of building products that are used in new home construction, repair and remodeling, outdoor structures, light industrial and commercial construction. Louisiana-Pacifichas an impressive average positive earnings surprise of 66.3% for the last four quarters.
ZAGG Inc designs, manufactures, and distributes mobile tech accessories for smartphones and tablets. This company’s flagship brand, the invisibleSHIELD, is a protective, high-tech patented film covering, designed for iPods, laptops, cell phones, digital cameras, PDAs, watch faces, GPS systems, gaming devices and other items. The company has an average positive surprise of 52.1% for the trailing four quarters, beating estimates twice.
ACCO Brands Corporation (ACCO - Free Report) is a leading provider of branded office products. Headquartered in Lake Zurich, IL, the company designs, manufactures, sources, markets, and sells office products, academic supplies, and calendar products across the globe. The company has an average positive surprise of 24.7% for the trailing four quarters, registering back-to-back beats.
Tech Data Corporation is a leading provider of Internet technology products, logistics management and other value-added services. It distributes microcomputer hardware and software products to value-added resellers, corporate resellers, retailers, direct marketers and Internet resellers. The company boasts an average positive surprise of 8.7% over the trailing four quarters, having beaten estimates thrice.
Aegean Marine Petroleum Network Inc. is a marine fuel logistics company, engaged in supplying and marketing refined marine fuel and lubricants to ships in port and at sea. The company has managed to beat earnings thrice in the trailing four quarters, with an average positive surprise of 12.3%.
Headquartered in Wilmington, DE, The Chemours Company (CC - Free Report) , offers performance chemicals to clients across the globe. The company has organized its business in three segments, namely, Titanium Technologies, Fluoroproducts and Chemical Solutions. It has a whopping average positive surprise of 151.6%, with three beats over the last four quarters.
Weight Watchers International, Inc. (WTW - Free Report) offers a broad range of weight control programs. The company offers scientifically designed programs, including group support and information on healthy eating patterns, behavior modification and physical activity. With three beats over the trailing four quarters, the company has a positive average surprise of 5.7%.
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 trial to the Research Wizard 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.
Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »