3 Stocks With Recent Price Strength Amid Severe Volatility
Wall Street is suffering from severe volatility, althoughOctober generally remains favorable for investors. The impressive bull run in the first seven months of this year has suffered major setbacks since August. Month to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have tumbled 1.4%, 2.4% and 3%, respectively.
Volatility continues as the Fed warned of one more rate hike of 25 basis points by the end of this year and a higher interest rate regime for a longer period. The first rate cut is not expected before September 2024 and the inflation rate is unlikely to decline to the central bank’s target rate of 2% before 2026.
Consequently, the yield on the benchmark 10-Year U.S. Treasury Note spiked above 5% last week. This happened for the first time since the Great Recession of 2007. The 10-Year yield is crucial as it reflects investors’ sentiment on the economy and financial markets.
Moreover, the intensifying geopolitical conflicts in the Middle East between Israel and Hamas may result in a spike in crude oil prices. This will raise the cost of transportation thereby hiking the general price level.
Despite severe volatility, a handful of stocks have shown price strength. We have selected three stocks likely to gain in the near term on the back of a favorable Zacks Rank. These companies are — Ramaco Resources Inc. METC, Construction Partners Inc. ROAD and J.Jill Inc. JILL.
Here’s How We Arrived at the Picks
We have primarily targeted stocks that have freshly been on a bull run. 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 it would have probably crashed. So, looking at stocks capable of beating the benchmark that they have set for themselves seems rational.
However, recent price strength alone cannot create magic. Therefore, other relevant parameters are needed to create a successful investment strategy.
Here’s how you should create the screen to shortlist the current as well as the potential winners.
Screening Parameters:
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 or 2: 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 narrowed down the search from over 7,700 stocks to three.
Let’s discuss these three stocks:
Ramaco Resources is an operator and developer of metallurgical coal primarily in southern West Virginia, southwestern Virginia and southwestern Pennsylvania. METC operates principally in Charleston, WV. METC serves blast furnace steel mills and coke plants in the United States, as well as international metallurgical coal consumers.
The stock price of Ramaco Resources has climbed 11.8% in the past four weeks. It has an expected earnings growth rate of 32.1% for next year. The Zacks Consensus Estimate for next-year earnings has improved more than 100% over the last 30 days.
Construction Partners is an infrastructure and road construction company. ROAD provides construction products and services to the public and private sectors. ROAD’s services include construction of highways, roads, bridges, airports and commercial and residential sites.
The stock price of Construction Partners has surged 5.9% in the past four weeks. It has an expected earnings growth rate of 47.1% for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings improved 10.3% over the last 30 days.
J.Jill operates as a specialty retailer of women’s apparel. JILL offers sweaters, tops, pants, dresses, shorts, skirts, sleepwear and accessories. JILL markets through retail stores, website and catalog.
The stock price of J.JILL has advanced 5.7% in the past four weeks. It has an expected earnings growth rate of 9.9% for next year (ending January 2025)). The Zacks Consensus Estimate for next-year earnings has improved 2% over the last 60 days.
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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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J.Jill, Inc. (JILL) : Free Stock Analysis Report
Ramaco Resources, Inc. (METC) : Free Stock Analysis Report
Construction Partners, Inc. (ROAD) : Free Stock Analysis Report
