For Immediate Release
Chicago, IL – October 11, 2019 - Stocks in this week’s article are Franco-Nevada Corp. (FNV - Free Report) , Keysight Technologies, Inc. (KEYS - Free Report) , Dunkin’ Brands Group, Inc. (DNKN - Free Report) and Zumiez Inc. (ZUMZ - Free Report) .
4 Top-Ranked Momentum Stocks Driven by Driehaus Strategy
The Driehaus strategy essentially uses the “buy high and sell higher" principle to select the best stocks that have the potential to substantially outperform the market. The success of this investment approach eventually helped Richard Herman Driehaus get a place in Barron’s All-Century Team.
The American Association of Individual Investors (AAII) proved that the strategy has the capability to offer high-than-market returns. AAII’s portfolio, which was developed based on the Driehaus strategy, returned 324.3% since the end of the last bear market compared with 85.5% gains registered by the S&P 500.
A Detailed Look Into 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 a decline and try to guess when it will turn around.” In line with this insight, AAII took into account the percentage change in 50-day moving average as one of the key criteria for creating a portfolio based on Driehaus’ philosophy.
It is calculated by dividing a stock’s month-end price minus the 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 change in 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.
Moreover, AAII found that Driehaus strategy primarily focuses on strong earnings growth rates and impressive earnings projections for picking potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was made to provide better returns over the long term.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/557513/4-topranked-momentum-stocks-driven-by-driehaus-strategy
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