5 Stocks with Solid Relative Price Strength to Buy Now
Earnings growth and valuation multiples are indeed important for investors to determine whether a stock has the ability to offer considerable returns. But these are also imperative to determine whether a stock’s price performance is ahead of its peers or the industry average.
If the stock’s performance is lacking that of the broader groups despite having impressive earnings growth or valuation multiples, then something must be wrong.
It’s always advisable to stay away from these stocks and bet on those that are outperforming their respective industries or benchmarks. This is because betting on a winner always increases the odds of winning.
At the same time, it is important that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better performance than the S&P 500 over a period of 1 to 3 months at the least and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.
Finally, it is important to find out whether analysts are optimistic about the upcoming earnings results of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.
Screening Parameters
Relative % Price change – 12 weeks greater than 0
Relative % Price change – 4 weeks greater than 0
Relative % Price change – 1 week greater than 0
(We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, 4 weeks and 1 week.)
% Change (Q1) Est. over 4 Weeks greater than 0: Positive current quarter estimate revisions over the last four weeks.
Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks – that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years – can get through.
Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity.
VGM Score less than or equal to B: Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or #2 (Buy) offer the best upside potential.
Here are the five stocks that made it through the screen:
Smith & Wesson Holding Corp. SWHC: Headquartered in Springfield, MA, Smith & Wesson is a top global designer, manufacturer and marketer of firearms and accessories. With a VGM score of “A”, the company has an excellent earnings surprise history. It has beaten estimates in each of the last four quarters at an average rate of 34.14%.
BG Staffing Inc. BGSF: The company is a provider of staffing services to a number of industries through its various operating segments. Sporting a VGM score of “A”, Plano, TX headquartered BG Staffing’s expected EPS growth rate for 3 to 5 years currently stands at 20%.
United Natural Foods Inc. UNFI: A leading distributor of natural, organic and specialty food and non-food products in the U.S. and Canada. Dayville, CT based United Natural foods has a VGM score of “A”. Over the past 30 days, the Zacks Consensus Estimate for 2016 and 2017 experienced an increase of 5.9% and 5.1%, respectively, to $2.51 and $2.67 per share.
Core-Mark Holding Company Inc. CORE: Headquartered in South San Francisco, CA, Core-Mark Holding is a wholesale distributor that provides sales, marketing, distribution, and logistics services to the convenience store industry. The company has a VGM score of “A” and surprised earnings to the upside in each of the last two quarters.
Isle of Capri Casinos Inc. ISLE: Based in St. Louis, MO, Isle of Capri Casinos is a leading owner and operator of gaming properties in Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri and Pennsylvania. The fiscal 2017 Zacks Consensus Estimate for this company is $1.43, representing 13.10% earnings per share growth over fiscal 2016. The next fiscal year’s average forecast is $1.59, pointing to 11.4% growth. Isle of Capri Casinos has a VGM score of “A”.
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.
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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.
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ISLE OF CAPRI (ISLE): Free Stock Analysis Report
CORE-MARK HLDG (CORE): Free Stock Analysis Report
UTD NATURAL FDS (UNFI): Free Stock Analysis Report
SMITH & WESSON (SWHC): Free Stock Analysis Report
BG STAFFING INC (BGSF): Free Stock Analysis Report
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