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Buy 3 Momentum Anomaly Stocks as High Yields, Oil Prices Hit Markets
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Key Takeaways
Rising oil prices and Treasury yields pressure U.S. stocks, putting momentum investing strategies in focus.
Enlight gained 99.46% over the past year but fell 4.8% last week, highlighting a short-term price pullback.
Vicor surged 449.1% over the past year, while Cenovus rose 73.2%, despite recent weekly declines.
Over the past couple of days, the broader U.S. equity markets pared back almost all the gains accrued at the beginning of the week as oil prices spiked and sovereign bond yields rose. While the 10-year Treasury note yield surged to the highest levels since 2002, the 30-year Treasury bond yield traded near 24-year highs. Crude oil prices soared as President Trump threatened to hit Iran with massive bombings and declined to sign any truce agreement to end the war.
Despite the short-term setbacks, investors broadly expect the imminent earnings season to act as a catalyst and fuel the stock market revival. With interest rates likely to remain unchanged at the next Federal Reserve meeting later this month, the markets are likely to hold fort 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 Enlight Renewable Energy Ltd (ENLT - Free Report) , Vicor Corporation (VICR - Free Report) and Cenovus Energy Inc. (CVE - 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:
Headquartered in Rosh HaAyin, Israel, Enlight operates a renewable energy platform. It develops wind energy and solar energy projects, as well as energy storage projects. The company holds a portfolio of renewable energy projects that consists of approximately 20 GW of multi-technology generation capacity and 35.8 GWh of energy storage capacity.
The stock has gained 99.46% over the past year but lost 4.8% over the past week. Enlight has a Momentum Score of B.
Andover, MA-based Vicor designs, develops, manufactures and markets modular power components and systems to convert electrical power for a range of devices. The company also licenses technology and receives recurring royalties. Vicor’s products focus on high-density AC and DC power conversion, with core expertise in 48V distribution while addressing other DC standards for data centers, transportation, military and industrial markets.
The stock has surged 449.1% over the past year but declined 2.1% over the past week. Vicor has a Momentum Score of A.
Calgary, Canada-based Cenovus is an integrated energy company. It produces crude oil, natural gas and natural gas liquids, and markets its production across North America and international markets. Its upstream operations are mainly in Canada and the Asia-Pacific region. Its downstream operations include upgrading and refining assets in Canada and the United States.
The stock has surged 73.2% in the past year but declined 1.5% in the past week. Cenovus has a Momentum Score of A.
View the Zacks #1 Rank List
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Buy 3 Momentum Anomaly Stocks as High Yields, Oil Prices Hit Markets
Key Takeaways
Over the past couple of days, the broader U.S. equity markets pared back almost all the gains accrued at the beginning of the week as oil prices spiked and sovereign bond yields rose. While the 10-year Treasury note yield surged to the highest levels since 2002, the 30-year Treasury bond yield traded near 24-year highs. Crude oil prices soared as President Trump threatened to hit Iran with massive bombings and declined to sign any truce agreement to end the war.
Despite the short-term setbacks, investors broadly expect the imminent earnings season to act as a catalyst and fuel the stock market revival. With interest rates likely to remain unchanged at the next Federal Reserve meeting later this month, the markets are likely to hold fort 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 Enlight Renewable Energy Ltd (ENLT - Free Report) , Vicor Corporation (VICR - Free Report) and Cenovus Energy Inc. (CVE - 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:
Headquartered in Rosh HaAyin, Israel, Enlight operates a renewable energy platform. It develops wind energy and solar energy projects, as well as energy storage projects. The company holds a portfolio of renewable energy projects that consists of approximately 20 GW of multi-technology generation capacity and 35.8 GWh of energy storage capacity.
The stock has gained 99.46% over the past year but lost 4.8% over the past week. Enlight has a Momentum Score of B.
Andover, MA-based Vicor designs, develops, manufactures and markets modular power components and systems to convert electrical power for a range of devices. The company also licenses technology and receives recurring royalties. Vicor’s products focus on high-density AC and DC power conversion, with core expertise in 48V distribution while addressing other DC standards for data centers, transportation, military and industrial markets.
The stock has surged 449.1% over the past year but declined 2.1% over the past week. Vicor has a Momentum Score of A.
Calgary, Canada-based Cenovus is an integrated energy company. It produces crude oil, natural gas and natural gas liquids, and markets its production across North America and international markets. Its upstream operations are mainly in Canada and the Asia-Pacific region. Its downstream operations include upgrading and refining assets in Canada and the United States.
The stock has surged 73.2% in the past year but declined 1.5% in the past week. Cenovus has a Momentum Score of A.