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Seagate & 2 Momentum Stocks to Buy Now for Explosive Upside
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Key Takeaways
Seagate, Western Digital and Dell stand out as top momentum picks under the Driehaus strategy.
Seagate posts a 12.4% average earnings surprise and a 124.6% expected growth rate.
Western Digital and Dell show strong momentum, with expected earnings growth of 96% and 86%.
Despite August’s reputation for being a traditionally volatile month for stocks, the U.S. stock market has remained resilient this year. This underscores the importance of focusing on stocks with strong momentum that have the potential to deliver further upside.
To uncover such stocks, investors should follow Richard Driehaus’ famous “buy high and sell higher” strategy, which earned him a place on Barron’s All-Century Team.
By applying the Driehaus momentum-investing approach, Seagate Technology Holdings plc (STX - Free Report) , Western Digital Corporation (WDC - Free Report) and Dell Technologies Inc. (DELL - Free Report) stand out as compelling momentum stocks and attractive entry points for investors.
The Driehaus Strategy: How to Spot Stocks With Big Upside Potential
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 Association of Individual Investors (“AAII”) considered the 50-day moving average one of the key criteria when creating a portfolio aligned with 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 above its 50-day moving average, signaling 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 prioritized in this strategy, which was designed to deliver better long-term returns.
Research Wizard’s Key Criteria for Picking Top-Performing Stocks
To make the strategy more profitable, we have considered only stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 or 2, 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 strong momentum score suggests a favorable opportunity to capitalize on a stock’s upward trend with a higher probability of success.
These few parameters have narrowed the universe of more than 7,743 stocks to only 43.
Here are the top three of the 43 stocks:
Seagate
Seagate provides data storage solutions across the U.S. and international markets. Seagate has a Zacks Rank #1 and a Momentum Score of B. The trailing four-quarter earnings surprise for STX is 12.4%, on average. The company’s expected earnings growth rate for the current year is 124.6%.
Western Digital
Western Digital develops and sells HDD-based data storage devices and solutions across global markets. Western Digital has a Zacks Rank #2 and a Momentum Score of A. The trailing four-quarter earnings surprise for WDC is 10.1%, on average. The company’s expected earnings growth rate for the current year is 96% (read more: Chasing NVIDIA? Western Digital May Be the Smarter AI Bet).
Dell Technologies
Dell Technologies develops, markets, sells, and supports integrated technology solutions and services worldwide. Dell Technologies has a Zacks Rank #2 and a Momentum Score of B. The trailing four-quarter earnings surprise for DELL is 18.7%, on average. The company’s expected earnings growth rate for the current year is 86%.
View the Zacks #1 Rank List
Image: Bigstock
Seagate & 2 Momentum Stocks to Buy Now for Explosive Upside
Key Takeaways
Despite August’s reputation for being a traditionally volatile month for stocks, the U.S. stock market has remained resilient this year. This underscores the importance of focusing on stocks with strong momentum that have the potential to deliver further upside.
To uncover such stocks, investors should follow Richard Driehaus’ famous “buy high and sell higher” strategy, which earned him a place on Barron’s All-Century Team.
By applying the Driehaus momentum-investing approach, Seagate Technology Holdings plc (STX - Free Report) , Western Digital Corporation (WDC - Free Report) and Dell Technologies Inc. (DELL - Free Report) stand out as compelling momentum stocks and attractive entry points for investors.
The Driehaus Strategy: How to Spot Stocks With Big Upside Potential
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 Association of Individual Investors (“AAII”) considered the 50-day moving average one of the key criteria when creating a portfolio aligned with 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 above its 50-day moving average, signaling 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 prioritized in this strategy, which was designed to deliver better long-term returns.
Research Wizard’s Key Criteria for Picking Top-Performing Stocks
To make the strategy more profitable, we have considered only stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
• Zacks Rank less than or equal to #2
Whether the market is good or bad, stocks with a Zacks Rank #1 or 2 have a proven track record 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 strong momentum score suggests a favorable opportunity to capitalize on a stock’s upward trend with a higher probability of success.
These few parameters have narrowed the universe of more than 7,743 stocks to only 43.
Here are the top three of the 43 stocks:
Seagate
Seagate provides data storage solutions across the U.S. and international markets. Seagate has a Zacks Rank #1 and a Momentum Score of B. The trailing four-quarter earnings surprise for STX is 12.4%, on average. The company’s expected earnings growth rate for the current year is 124.6%.
Western Digital
Western Digital develops and sells HDD-based data storage devices and solutions across global markets. Western Digital has a Zacks Rank #2 and a Momentum Score of A. The trailing four-quarter earnings surprise for WDC is 10.1%, on average. The company’s expected earnings growth rate for the current year is 96% (read more: Chasing NVIDIA? Western Digital May Be the Smarter AI Bet).
Dell Technologies
Dell Technologies develops, markets, sells, and supports integrated technology solutions and services worldwide. Dell Technologies has a Zacks Rank #2 and a Momentum Score of B. The trailing four-quarter earnings surprise for DELL is 18.7%, on average. The company’s expected earnings growth rate for the current year is 86%.