We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Momentum Anomaly Stocks to Buy as Markets Surge on AI Rally
Read MoreHide Full Article
Key Takeaways
Centene gained 98.75% over the past year but fell 6.4% in the past week, with a Momentum Score of A.
BrightSpring surged 102.4% over the past year but lost 7.4% in the past week, with a Momentum Score of A.
Delek jumped 129.8% in the past year but slipped 0.1% in the past week, with a Momentum Score of A.
The broader U.S. equity markets rose sharply yesterday as oil prices declined and sovereign bond yields pulled back. AI-related stocks primarily led the rally, with leading blue-chip firms rebounding sharply. This followed a lackluster last week, when spiraling oil prices and political uncertainty forced the Federal Reserve to hike interest rates by a quarter point to tame inflationary pressures. Although crude oil prices have cooled off since then, the Middle East war tensions refused to abate.
The latest escalation over the weekend was triggered by missile and drone attacks by Iran-backed Houthis on Saudi Arabia. This has led to renewed military action between the United States and its allies against Iran, leading to heightened uncertainty in the region, with markets bracing for highly volatile trading sessions in the near future. 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 Centene Corporation (CNC - Free Report) , BrightSpring Health Services, Inc. (BTSG - Free Report) and Delek US Holdings, Inc. (DK - 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 four stocks that made it through this screen:
Headquartered in Saint Louis, MO, Centene has established itself as a leading player in healthcare services. This well-diversified healthcare company primarily provides services to government-sponsored healthcare programs, while also serving underinsured and uninsured individuals through member-focused services. It is also engaged in providing education and outreach programs to inform and assist members in accessing quality, appropriate healthcare services.
The stock has gained 98.75% over the past year but lost 6.4% over the past week. Centene has a Momentum Score of A.
Headquartered in Louisville, KY, BrightSpring is a national home and community-based healthcare services platform, integrating pharmacy and provider care for medically complex patients across Medicare, Medicaid and commercial payors.
The stock has surged 102.4% over the past year but declined 7.4% over the past week. BrightSpring has a Momentum Score of A.
Brentwood, TN-based Delek is an independent refiner, transporter and marketer of petroleum products. The refining assets consist primarily of refineries operated in Tyler and Big Spring, TX, El Dorado, AR and Krotz Springs, LA, with a combined nameplate crude throughput capacity of 302,000 barrels per day.
The stock has surged 129.8% in the past year but declined 0.1% in the past week. Delek has a Momentum Score of A.
View the Zacks #1 Rank List
Image: Shutterstock
3 Momentum Anomaly Stocks to Buy as Markets Surge on AI Rally
Key Takeaways
The broader U.S. equity markets rose sharply yesterday as oil prices declined and sovereign bond yields pulled back. AI-related stocks primarily led the rally, with leading blue-chip firms rebounding sharply. This followed a lackluster last week, when spiraling oil prices and political uncertainty forced the Federal Reserve to hike interest rates by a quarter point to tame inflationary pressures. Although crude oil prices have cooled off since then, the Middle East war tensions refused to abate.
The latest escalation over the weekend was triggered by missile and drone attacks by Iran-backed Houthis on Saudi Arabia. This has led to renewed military action between the United States and its allies against Iran, leading to heightened uncertainty in the region, with markets bracing for highly volatile trading sessions in the near future. 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 Centene Corporation (CNC - Free Report) , BrightSpring Health Services, Inc. (BTSG - Free Report) and Delek US Holdings, Inc. (DK - 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 four stocks that made it through this screen:
Headquartered in Saint Louis, MO, Centene has established itself as a leading player in healthcare services. This well-diversified healthcare company primarily provides services to government-sponsored healthcare programs, while also serving underinsured and uninsured individuals through member-focused services. It is also engaged in providing education and outreach programs to inform and assist members in accessing quality, appropriate healthcare services.
The stock has gained 98.75% over the past year but lost 6.4% over the past week. Centene has a Momentum Score of A.
Headquartered in Louisville, KY, BrightSpring is a national home and community-based healthcare services platform, integrating pharmacy and provider care for medically complex patients across Medicare, Medicaid and commercial payors.
The stock has surged 102.4% over the past year but declined 7.4% over the past week. BrightSpring has a Momentum Score of A.
Brentwood, TN-based Delek is an independent refiner, transporter and marketer of petroleum products. The refining assets consist primarily of refineries operated in Tyler and Big Spring, TX, El Dorado, AR and Krotz Springs, LA, with a combined nameplate crude throughput capacity of 302,000 barrels per day.
The stock has surged 129.8% in the past year but declined 0.1% in the past week. Delek has a Momentum Score of A.