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Top 3 Breakout Stocks to Buy Now for Active Investors
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Key Takeaways
Flotek Industries, NatWest Group and Ermenegildo Zegna are highlighted as breakout stocks.
The screening used metrics like price change, 52-week highs, beta and stock price limits.
FTK, NWG and ZGN each show strong expected earnings growth for the current year.
An active investing approach involves identifying breakout stocks within a defined price range. Sell if the price falls below the lower band and hold for gains if it exceeds the upper band.
To that end, Flotek Industries, Inc. (FTK - Free Report) , NatWest Group plc (NWG - Free Report) and Ermenegildo Zegna N.V. (ZGN - Free Report) have been selected as today’s breakout stocks.
Zeroing in on Breakout Stocks
To pick a breakout stock, calculate support and resistance levels. A support level is the lower bound for stock movements, while a resistance level refers to the maximum price it trades at within a considerable period.
In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. The majority of traders are willing to go long on the stock at the resistance level, meaning they would like to add it to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.
Has a Genuine Breakout Occurred?
The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.
For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the established trading channel is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive at first glance.
Screening Criteria Using Research Wizard:
• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases but whose gains are not excessive)
• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.)
• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy-rated stocks can get through.)
(Stocks that move more than the broader market but within a reasonable limit.)
• Current price less than or equal to $20 (Stocks reasonably priced)
These criteria narrow the universe of more than 6,853 stocks to only ten. Here are the top three stocks:
Flotek Industries
Flotek Industries is a technology-driven green chemistry and data company serving industrial and commercial markets worldwide. It has an expected earnings growth rate of 94.1% for the current year. FTK currently has a Zacks Rank #2.
NatWest Group
NatWest Group provides banking and financial services in the U.K. and globally. The company has an expected earnings growth rate of 30.1% for the current year. NWG currently has a Zacks Rank #2.
Ermenegildo Zegna
Ermenegildo Zegna designs, manufactures and markets luxury clothing, footwear and accessories worldwide. The company has an expected earnings growth rate of 37.5% for the current year. ZGN currently has a Zacks Rank #2.
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
Top 3 Breakout Stocks to Buy Now for Active Investors
Key Takeaways
An active investing approach involves identifying breakout stocks within a defined price range. Sell if the price falls below the lower band and hold for gains if it exceeds the upper band.
To that end, Flotek Industries, Inc. (FTK - Free Report) , NatWest Group plc (NWG - Free Report) and Ermenegildo Zegna N.V. (ZGN - Free Report) have been selected as today’s breakout stocks.
Zeroing in on Breakout Stocks
To pick a breakout stock, calculate support and resistance levels. A support level is the lower bound for stock movements, while a resistance level refers to the maximum price it trades at within a considerable period.
In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. The majority of traders are willing to go long on the stock at the resistance level, meaning they would like to add it to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.
Has a Genuine Breakout Occurred?
The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.
For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the established trading channel is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive at first glance.
Screening Criteria Using Research Wizard:
• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases but whose gains are not excessive)
• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.)
• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy-rated stocks can get through.)
No matter whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
• Beta for 60 months less than or equal to 2
(Stocks that move more than the broader market but within a reasonable limit.)
• Current price less than or equal to $20 (Stocks reasonably priced)
These criteria narrow the universe of more than 6,853 stocks to only ten. Here are the top three stocks:
Flotek Industries
Flotek Industries is a technology-driven green chemistry and data company serving industrial and commercial markets worldwide. It has an expected earnings growth rate of 94.1% for the current year. FTK currently has a Zacks Rank #2.
NatWest Group
NatWest Group provides banking and financial services in the U.K. and globally. The company has an expected earnings growth rate of 30.1% for the current year. NWG currently has a Zacks Rank #2.
Ermenegildo Zegna
Ermenegildo Zegna designs, manufactures and markets luxury clothing, footwear and accessories worldwide. The company has an expected earnings growth rate of 37.5% for the current year. ZGN currently has a Zacks Rank #2.
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.