October can be a volatile month for the stock market and has historically seen major sell-offs. Investors seeking to boost returns during periods of uncertainty should take a more active approach to stock selection, identifying potential breakout opportunities within well-defined price ranges.

Under this strategy, a stock should be sold if it falls below the lower band. In contrast, a move above the upper band signals a potential breakout and an opportunity to stay invested to capture continued upside momentum.

Using this framework, Corsair Gaming, Inc. (CRSR Quick QuoteCRSR - Free Report) , Nordic American Tankers Limited (NAT Quick QuoteNAT - Free Report) and HireQuest, Inc. (HQI Quick QuoteHQI - Free Report) stand out as potential breakout stocks in October.

Finding Breakout Stocks With High Return Potential

To pick a breakout stock, calculate support and resistance levels. A support level is the lower bound for stock movements, while a resistance level is the maximum price it trades at over a considerable period.

In other words, demand for a stock is lowest at its support level, meaning most traders are willing to sell it. At the resistance level, most traders are willing to go long the stock, indicating they would like to add it to their portfolios. 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 resistance.

Is the Stock's Breakout Confirmed?

The main risk of this strategy is buying an apparent breakout candidate at the wrong time. When a stock moves above the resistance level, it should be highly prized by 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.

Research Wizard Stock Selection Criteria

• 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.) 

Regardless of whether the market is strong or weak, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven track record of outperforming the market. 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 four.

Here are the top three stocks:

Corsair Gaming

Corsair Gaming develops and sells gaming and streaming peripherals, components, and systems worldwide. Corsair Gaming has a Zacks Rank #1. CRSR's expected earnings growth rate for the current year is 45.2%. 

Nordic American Tankers

Nordic American Tankers owns, operates and charters double-hull tankers worldwide. Nordic American Tankers has a Zacks Rank #2. NAT's expected earnings growth rate for the current year is 1,200%. 

HireQuest

HireQuest provides staffing services across the United States. HireQuest has a Zacks Rank #2. HQI's expected earnings growth rate for the current year is 12.7%.