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5 Stocks With Recent Price Strength to Maximize Your Gains

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·6 min read
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Wall Street completed an impressive first half of 2021, after a stellar run in 2020 despite the pandemic. The momentum continued in the first month of the second half also. The three major stock indexes — the Dow, the SP 500 and the Nasdaq Composite — gained 1.2%, 2.3% and 1.2%, respectively, in July.

In fact, market's benchmark — the S&P 500 Index — completed a six-month winning streak after declining in January. In the first seven months of this year, the tech-heavy Nasdaq Composite ended in red only in May. The blue-chip Dow dropped in January and fell marginally in June.

This shows that Wall Street has remained in the growth trajectory so far this year, with the Dow, the S&P 500 and the Nasdaq Composite up 14.8%, 17% and 13.9%, respectively. The momentum is likely to prevail in the rest of 2021 too.

The U.S. economy exceeded the pre-pandemic level in second-quarter 2021 supported by the  great reopening. Consumer spending, which accounts for nearly 70% of the GDP, remained robust. The core (excluding volatile food and energy items) personal  consumption expenditure (PCE) jumped 6% in the second quarter from an  upwardly revised 2.7% in the previous quarter.

Core PCE inflation —- Fed's favorite inflation gauge — climbed 3.5% annually in June, its highest since July 1991. However, the data was slightly above May's reading of 3.4% and fell below the consensus estimate of 3.6%. Moreover, personal consumption returned to the positive territory with a gain of 1% in June after declining 0.1% in May.

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 freshly 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.

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 have narrowed down the search from over 7,700 stocks to just 34.

Here we present five out of those 34 stocks:

AdvanSix Inc. ASIX manufactures and sells polymer resins in the United States and internationally. It offers Nylon 6, a polymer resin, which is a synthetic material used to produce fibers, filaments, engineered plastics and films.

The company’s stock price has soared 25.2% in the past four weeks. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.2% over the last 30 days.

Sonic Automotive Inc. SAH is one of the leading automotive retailers in the United States. Apart from selling new and used cars and light trucks, the company offers warranties, service contracts, vehicle financing and insurance.

The stock price has jumped 23.7% in the past four weeks. The company has an expected earnings growth rate of 68.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 14.3% over the last 7 days.

Crocs Inc. CROX designs, develops, manufactures, markets and distributes casual lifestyle footwear and accessories for men, women and children worldwide. It offers various footwear products, including clogs, sandals, flips and slides, shoes, and boots under the Crocs brand name.

The stock price has climbed 20.7% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last 30 days.

Advanced Micro Devices Inc. AMD is a major player in the microprocessor and graphics processing markets. The company plans to expand its semi-custom business into high-growth markets such as the semi-custom ultra-low power client, embedded, dense server and professional graphics markets, where it can offer differentiated products that use its APU and graphics IP.

The stock price has rallied 19.2% in the past four weeks. The company has an expected earnings growth rate of 93.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 15.2% over the last 7 days.

HCA Healthcare Inc. HCA is the largest non-governmental operator of acute care hospitals in the United States.

The stock price has surged 18% in the past four weeks. The company has an expected earnings growth rate of 51% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 16.6% over the last 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.

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.


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Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
 
Crocs, Inc. (CROX) : Free Stock Analysis Report
 
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
 
Sonic Automotive, Inc. (SAH) : Free Stock Analysis Report
 
AdvanSix Inc. (ASIX) : Free Stock Analysis Report
 
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