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3 Breakout Stocks Active Investors Should Buy for a Strong Portfolio
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Key Takeaways
South Atlantic Bancshares, Crexendo, and Hecla Mining meet key breakout screening criteria.
The trio shows strong expected earnings growth, led by Hecla Mining's 245.5% rise.
Each stock trades near 52-week highs, signaling potential breakout momentum.
An active investing strategy includes detecting breakout stocks trading within a specific price range. Investors usually sell when the price falls below the lower band and hold onto positions when it breaks above the upper band for potential gains.
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 that are on the verge of a breakout or those that have just broken above the resistance level.
Is the Breakout for Real?
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 19. Here are the top three stocks:
South Atlantic Bancshares
South Atlantic Bancshares is the holding company for South Atlantic Bank, which offers banking products and services to individuals and small businesses in the United States. It has an expected earnings growth rate of 55.7% for the current year. SABK currently has a Zacks Rank #1.
Crexendo
Crexendo provides cloud communication and unified communications services in the United States and globally. It has an expected earnings growth rate of 26.9% for the current year. CXDO currently has a Zacks Rank #2.
Hecla Mining
Hecla Mining, along with its subsidiaries, provides precious and base metals across North America and Asia. It has an expected earnings growth rate of 245.5% for the current year. HL 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: Shutterstock
3 Breakout Stocks Active Investors Should Buy for a Strong Portfolio
Key Takeaways
An active investing strategy includes detecting breakout stocks trading within a specific price range. Investors usually sell when the price falls below the lower band and hold onto positions when it breaks above the upper band for potential gains.
Today’s breakout stock picks are South Atlantic Bancshares, Inc. (SABK - Free Report) , Crexendo, Inc. (CXDO - Free Report) and Hecla Mining Company (HL - Free Report) .
Spotlight 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 that are on the verge of a breakout or those that have just broken above the resistance level.
Is the Breakout for Real?
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 19. Here are the top three stocks:
South Atlantic Bancshares
South Atlantic Bancshares is the holding company for South Atlantic Bank, which offers banking products and services to individuals and small businesses in the United States. It has an expected earnings growth rate of 55.7% for the current year. SABK currently has a Zacks Rank #1.
Crexendo
Crexendo provides cloud communication and unified communications services in the United States and globally. It has an expected earnings growth rate of 26.9% for the current year. CXDO currently has a Zacks Rank #2.
Hecla Mining
Hecla Mining, along with its subsidiaries, provides precious and base metals across North America and Asia. It has an expected earnings growth rate of 245.5% for the current year. HL 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.