While Wall Street has performed remarkably in 2019, the last month is looking even more spectacular buoyed by strong economic data, especially labor market data. Generally, December remains a good month for stock investors. Holiday sales usually pick up this month.
However, some concerns remain. Global economy is yet to show signs of recovery. The U.S. manufacturing industry is still suffering from weakness although recently released industrial production data for November was better than expected. Moreover, phase-one trade deal is yet to be signed by the presidents of the United States and China.
So, wouldn’t it be a safer strategy to look for stocks that are winners currently and have the potential to gain further?
Sounds good? Here’s how to execute it:
One should primarily target stocks that have recently been on a bull run. Actually, stocks seeing price strength recently have a high chance of carrying the momentum forward.
If a stock is continuously witnessing an uptrend, there must be a solid reason or else it would have probably crashed. So, looking at stocks that are capable of beating the benchmark that they have set for themselves seems rational.
However, recent price strength alone cannot create magic. Therefore, you need to set other relevant parameters to create a successful investment strategy.
Here’s how you should create the screen to shortlist the current as well as the potential winners.
Percentage Change in Price (4 Weeks) greater than zero: This criterion shows that the stock has moved higher in the last four weeks.
Percentage Change Price (12 Weeks) greater than 10: This indicates that the stock has seen momentum over the last three months. This lowers the risk of choosing stocks that may have drawn attention due to the overwhelming performance of the overall market in a very short period.
Zacks Rank 1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Average Broker Rating 1: This indicates that brokers are also highly hopeful about the stock’s future performance.
Current Price greater than 5: The stocks must all be trading at a minimum of $5.
Current Price/ 52-Week High-Low Range more than 85%: This criterion filters stocks that are trading near their respective 52-week highs. It indicates that these are strong enough in terms of price.
Just these few criteria have narrowed down the search from over 7,700 stocks to just fourteen.
Here we present five stocks out of the fourteen:
Tilly's Inc. (TLYS - Free Report) retails casual apparel, footwear, and accessories for young men and women, and boys and girls in the United States. It also provides third-party merchandise assortment across its various product categories.
The company’s stock price has surged 30.1% in the past four weeks. It has an expected earnings growth rate of 4.8% for next year. The Zacks Consensus Estimate for next year has improved 4.5% over the past 30 days.
The Bancorp Inc. (TBBK - Free Report) focuses on service to small and mid-size businesses and their principals in the Philadelphia-Wilmington market area, and on private-label affinity group programs, including merchant card servicing.
The stock price has advanced 25.7% in the past four weeks. The company has expected earnings growth rate of 10.1% for next year. The Zacks Consensus Estimate for next year has improved 0.8% over the past 30 days.
Cohu Inc. (COHU - Free Report) is a leading supplier of semiconductor test and inspection handlers, micro-electro mechanical system test modules, test contactors and thermal sub-systems used by global semiconductor manufacturers and test subcontractors.
The stock price has advanced 18.3% in the past four weeks. The company has expected earnings growth rate of 681% for next year. The Zacks Consensus Estimate for next year has improved 0.9% over the past 30 days.
Teekay Tankers Ltd. (TNK - Free Report) provides marine transportation services to oil industries in Bermuda and internationally. It operates through two segments, Conventional Tanker and Ship-to-ship Transfer.
The stock price has advanced 13.6% in the past four weeks. The company has expected earnings growth rate of 180.9% for next year. The Zacks Consensus Estimate for next year has improved 17.5% over the past 30 days.
Sony Corp. (SNE - Free Report) designs, develops, produces, and sells electronic equipment, instruments, and devices for the consumer, professional, and industrial markets worldwide. It distributes software titles and add-on content through digital networks by Sony Interactive Entertainment; network services.
The stock price has gained 10.1% in the past four weeks. It has expected earnings growth rate of 14.9 for the current year. The Zacks Consensus Estimate for the current year has improved 7.6% in the past 30 days.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.