Over the past couple of days, broader U.S. equity markets inched higher, buoyed by euphoria around AI firm Anthropic's IPO. This sparked a healthy tech sector rally, soothing frayed investor nerves amid growing concerns that the massive ramp-up in spending on data centers was not sustainable. The uptrend was further propelled by declining oil prices as Iran's top leadership showed interest in ending the lingering conflict. 

The focus has now shifted to the Federal Reserve policy meeting for cues on whether another rate hike will take place before year-end 2026, with investors broadly expecting interest rates to remain unchanged for now. 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 ATI Inc. (ATI Quick QuoteATI - Free Report) , Delek US Holdings, Inc. (DK Quick QuoteDK - Free Report) and Marathon Petroleum Corporation (MPC Quick QuoteMPC - 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 nine stocks that made it through this screen:

Dallas, TX-based ATI is a diversified global specialty materials producer. The company produces high-performance materials, including titanium and titanium-based alloys, nickel- and cobalt-based alloys and superalloys, advanced powder alloys and other specialty materials and metallic powder alloys, as well as long product forms, such as ingot, billet, bar, rod, wire, shapes and rectangles, seamless tubes, plus precision forgings, components and machined parts. It also offers zirconium and related alloys, including hafnium and niobium, nickel-based alloys, titanium and titanium-based alloys and specialty alloys in various forms, such as plate, sheet and precision rolled strip products. 

The stock has gained 68.6% over the past year but lost 9.3% over the past week. ATI has a Momentum Score of A. 

Founded in 2001, Brentwood, TN-based Delek is an independent refiner, transporter and marketer of petroleum products. The company’s operations are organized into two reportable segments: Refining and Logistics.

The stock has surged 87.9% over the past year but declined 9.4% over the past week. Delek has a Momentum Score of A.

Findlay, OH-based Marathon Petroleum is a leading independent refiner, transporter and marketer of petroleum products. In October 2018, Marathon Petroleum completed the acquisition of its rival Andeavor in a $23.3 billion deal, becoming the nationwide largest refining company by market capitalization. The deal also made the company the largest U.S. refiner and the fifth largest in the world by capacity.   

The stock has surged 126.8% in the past year but declined 8.2% in the past week. Marathon Petroleum has a Momentum Score of A.