Trends change faster than weather in Wall Street. The stock market commenced 2020 from where it left off last year. However, the market’s impressive bull run continued only till mid- February, after which the novel coronavirus began to spread rapidly across the world. The global economy almost came to a standstill on account of the imposition of worldwide lockdowns to curb the spread of the deadly virus.
Anticipating a global economic recession investors started panic selling of risky assets like equities, ending the historically longest bull run of Wall Street. All three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — entered into the bear market on Mar 11 and 12. Thereafter, a sharp downtrend continued till Mar 23.
However, Wall Street has been witnessing an impressive rally since Mar 24. The three key indexes managed to come out of the bear territory on Mar 26, Apr 8 and Apr 14, respectively.
At this stage, wouldn’t it be a safer strategy to look for stocks that are winners 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 sixteen.
Here we present five out of those sixteen stocks:
ThermoGenesis Holdings Inc. (THMO - Free Report) develops, commercializes and markets a range of automated technologies for chimeric antigen receptor (CAR)-T and other cell-based therapies in the United States, China, Rest of Asia, Europe, and internationally. The stock price has rallied 189.6% in the past four weeks. The company has an expected earnings growth of 106% for the current year.
21Vianet Group Inc. (VNET - Free Report) provides carrier and cloud-neutral Internet data center services to Internet companies, government entities, blue-chip enterprises, and small-to mid-sized enterprises in China. It operates in two segments, Hosting and Related Services, and Managed Network Services. The stock price has surged 24% in the past four weeks. The company has an expected earnings growth of 70.8% for the current year.
Livongo Health Inc. (LVGO - Free Report) provides an integrated suite of solutions for the healthcare industry in North America. These solutions promote health behavior change based on real-time data capture supported by intuitive devices and insights driven by data science. The stock price has jumped 74.7% in the past four weeks. The company has an expected earnings growth of 51.3% for the current year.
Cue Biopharma Inc. (CUE - Free Report) is a biopharmaceutical company that develops biologic drugs for the selective modulation of the human immune system to treat a range of cancers, chronic infectious diseases, and autoimmune disorders.. The stock price has climbed 72.3% in the past four weeks. The company has an expected earnings growth of 19.9% for the current year.
Sharps Compliance Corp. (SMED - Free Report) is a leading provider of cost-effective disposal solutions for small quantity generators of medical waste. The stock price has gained 27.1% in the past four weeks. The company has an expected earnings growth of 800% for the current year.
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.