Volatility returned to U.S. stock markets in June after back-to-back spectacular performances in April and May. As many as 24 states have witnessed a spike in new cases of COVID-19 once the economy starts reopening from the last week of May.
Consequently, a large section of economists and financial experts, who were expecting a V-shaped recovery of the U.S. economy just a couple of week ago, are now skeptical. Wall Street has been facing severe fluctuations and choppy trading almost regularly this month.
Despite the resurgence of the deadly coronavorus in many states, it is unlikely that a second round of lockdown will be imposed. Better-than-expected economic data, despite the fact that the aggregate economy is still way below its pre-lockdown level of activities, have shown fundamental stability.
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 8.
Here we present five out of those 8 stocks:
eXp World Holdings Inc. (EXPI - Free Report) provides cloud-based real estate brokerage services for residential homeowners and homebuyers in the United States, Canada, the United Kingdom and Australia.
The stock price has jumped 58.4% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved more than 100% over the last 60 days.
Lakeland Industries Inc. (LAKE - Free Report) manufactures and sells industrial protective clothing and accessories for the industrial and public protective clothing market worldwide. It has five divisions and three wholly-owned subsidiaries.
The stock has soared 54.8% in the past four weeks. The company has expected earnings growth of more than 100% for the current year (ending January 2021). The Zacks Consensus Estimate for the current year has improved more than 100% over the last 60 days.
Meridian Bioscience Inc. (VIVO - Free Report) is a life science company that develops, manufactures, distributes and sells diagnostic test kits primarily for various gastrointestinal and respiratory infectious diseases and elevated blood lead levels worldwide.
The stock price has soared 39.6% in the past four weeks. The company has expected earnings growth of 8.8% for the current year (ending September 2020). The Zacks Consensus Estimate for the current year has improved more than 100% over the last 60 days.
Kiniksa Pharmaceuticals Ltd. (KNSA - Free Report) is a clinical-stage biopharmaceutical company, focused on discovering, acquiring, developing and commercializing therapeutic medicines for patients suffering from debilitating diseases worldwide.
The stock price has surged 10.4% in the past four weeks. The company has expected earnings growth of 22.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.1% over the last 60 days.
iClick Interactive Asia Group Ltd. (ICLK - Free Report) provides an online marketing technology platform. It offers digital marketing, data analysis, display solutions, software development and other services.
The stock price has gained 1.7% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved by more than 100% over the last 60 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.
Click here to sign up for a free trial to the Research Wizard today.
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.