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Five Below shares are up 250.8% in a year, down 2.9% in a week, with a Momentum Score of A.
Permian Resources is up 81.6% over 52 weeks but down 6.5% in the past week, Momentum Score B.
Alcoa has surged 191.1% in a year, slipped 1.5% in a week, and carries a Momentum Score of A.
The broader U.S. equity markets witnessed a strong rally this week, with benchmark indices within touching distance of an all-time high that wiped out the losses stemming from the Iran war. The uptrend was largely buoyed by optimism regarding a likely truce deal between the United States and Iran, despite no breakthrough in the initial discussions. With investors pinning hopes on a possible win-win deal between the two warring parties as negotiations continued, markets were further propelled by a relatively healthy start to the earnings season.
As the saga unfolds, it is likely to minimize the uncertainty that has affected the global energy market, with crude oil prices remaining highly volatile. Amid the vagaries of the market, 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, like Five Below, Inc. (FIVE - Free Report) , Permian Resources Corporation (PR - Free Report) and Alcoa Corporation (AA - Free Report) 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. 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.
Momentum strategies have been known to be alpha-generative over a long period and across market stages. Therefore, this strategy is quite tricky to implement, as detecting these trends is not easy. 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 long-term price momentum and a short-term pullback in price.
Screening Parameters for Momentum Anomaly Stocks
Percentage Change in Price (52 Weeks) = Top #50: This selects the top 50 stocks with the best percentage price change over the last 52 weeks. This parameter ensures we get the best stocks that have appreciated steadily over the past year.
Percentage Change in Price (1 Week) = Bottom #10: From the above 50 stocks, we then choose those that are also among the 10 worst performers over a short one-week period. This parameter picks the ones that have witnessed a short-term pullback in price.
Momentum Style Score of B or Better: A top Momentum Style Score knocks out a lot of the screening process, as it takes into account several factors that include volume change and performance relative to its peers. It indicates when the timing is best to grab a stock and take advantage of its momentum with the highest probability of success. Stocks with a Momentum Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), handily outperform other stocks.
Current Price Greater Than $5: The stocks must all be trading at a minimum of $5.
Market Capitalization = Top #3000: We have chosen stocks that are among the top 3000 in terms of market value to ensure the stability of price.
Average 20-Day Volume Greater Than 100,000: A substantial trading volume ensures that these stocks are easily tradable.
Here are three of the five stocks that made it through this screen:
Based in Pennsylvania, Five Below is a specialty value chain retailer that offers a wide range of premium-quality, trendy merchandise for $5 or less. The company mainly targets teenagers or pre-teen shoppers for its products, which include certain brands and licensed merchandise. Notably, these products belong to categories such as Style, Room, Sports, Tech, Create, Party, Candy and Now.
The stock has jumped a whopping 250.8% in the past year but declined 2.9% in the past week. Five Below has a Momentum Score of A.
Headquartered in Midland, TX, Permian Resources is an independent oil and gas company formed through the consolidation of Colgate Energy in 2022 and Earthstone Energy in 2023. These strategic mergers significantly expanded the company’s footprint in the Permian Basin, solidifying its presence as a major operator in one of the most productive oil regions in the United States.
The stock has soared 81.6% over the past year but has lost 6.5% over the past week. Permian Resources has a Momentum Score of B.
Headquartered in Pittsburgh, PA, Alcoa engages in active mining of bauxite and other aluminous ores. It also generates electricity that is sold to large industrial consumers, distribution firms and other power generation companies.
The stock has surged 191.1% over the past year but has lost 1.5% over the past week. Alcoa has a Momentum Score of A.
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Buy 3 Momentum Anomaly Stocks as Potential Truce Deal Propels Markets
Key Takeaways
The broader U.S. equity markets witnessed a strong rally this week, with benchmark indices within touching distance of an all-time high that wiped out the losses stemming from the Iran war. The uptrend was largely buoyed by optimism regarding a likely truce deal between the United States and Iran, despite no breakthrough in the initial discussions. With investors pinning hopes on a possible win-win deal between the two warring parties as negotiations continued, markets were further propelled by a relatively healthy start to the earnings season.
As the saga unfolds, it is likely to minimize the uncertainty that has affected the global energy market, with crude oil prices remaining highly volatile. Amid the vagaries of the market, 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, like Five Below, Inc. (FIVE - Free Report) , Permian Resources Corporation (PR - Free Report) and Alcoa Corporation (AA - Free Report) 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. 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.
Momentum strategies have been known to be alpha-generative over a long period and across market stages. Therefore, this strategy is quite tricky to implement, as detecting these trends is not easy. 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 long-term price momentum and a short-term pullback in price.
Screening Parameters for Momentum Anomaly Stocks
Percentage Change in Price (52 Weeks) = Top #50: This selects the top 50 stocks with the best percentage price change over the last 52 weeks. This parameter ensures we get the best stocks that have appreciated steadily over the past year.
Percentage Change in Price (1 Week) = Bottom #10: From the above 50 stocks, we then choose those that are also among the 10 worst performers over a short one-week period. This parameter picks the ones that have witnessed a short-term pullback in price.
Zacks Rank #1: Stocks sporting a Zacks Rank #1 (Strong Buy) have a proven history of outperformance irrespective of the market conditions. You can see the complete list of today’s Zacks #1 Rank stocks here.
Momentum Style Score of B or Better: A top Momentum Style Score knocks out a lot of the screening process, as it takes into account several factors that include volume change and performance relative to its peers. It indicates when the timing is best to grab a stock and take advantage of its momentum with the highest probability of success. Stocks with a Momentum Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), handily outperform other stocks.
Current Price Greater Than $5: The stocks must all be trading at a minimum of $5.
Market Capitalization = Top #3000: We have chosen stocks that are among the top 3000 in terms of market value to ensure the stability of price.
Average 20-Day Volume Greater Than 100,000: A substantial trading volume ensures that these stocks are easily tradable.
Here are three of the five stocks that made it through this screen:
Based in Pennsylvania, Five Below is a specialty value chain retailer that offers a wide range of premium-quality, trendy merchandise for $5 or less. The company mainly targets teenagers or pre-teen shoppers for its products, which include certain brands and licensed merchandise. Notably, these products belong to categories such as Style, Room, Sports, Tech, Create, Party, Candy and Now.
The stock has jumped a whopping 250.8% in the past year but declined 2.9% in the past week. Five Below has a Momentum Score of A.
Headquartered in Midland, TX, Permian Resources is an independent oil and gas company formed through the consolidation of Colgate Energy in 2022 and Earthstone Energy in 2023. These strategic mergers significantly expanded the company’s footprint in the Permian Basin, solidifying its presence as a major operator in one of the most productive oil regions in the United States.
The stock has soared 81.6% over the past year but has lost 6.5% over the past week. Permian Resources has a Momentum Score of B.
Headquartered in Pittsburgh, PA, Alcoa engages in active mining of bauxite and other aluminous ores. It also generates electricity that is sold to large industrial consumers, distribution firms and other power generation companies.
The stock has surged 191.1% over the past year but has lost 1.5% over the past week. Alcoa has a Momentum Score of A.