5 Stocks With Recent Price Strength to Tap Wall Street Rally
Last week was an interesting one for Wall Street. The Fed raised the benchmark interest rate for the first time in more than three years and warned of harsher measures in the future if rate hike fails to cool mounting inflation, which is currently at its 40-year high. Moreover, the geopolitical conflict between Russia and Ukraine has continued for nearly a month.
Yet, the U.S. stock markets rallied last week. The major stock indexes recorded their best weekly performance since November 2020. The north bound movement of U.S. stocks continued for the first two trading days of this week too. This came after Wall Street’s severe bad patch since mid-January in contrast to astonishing performance in the pandemic-ridden 2020 and 2021.
Therefore, the market was oversold even before the Fed hiked its interest rate. Additionally, the way the rate-sensitive technology and consumer discretionary sectors climbed last week, it seems that a 2% hike in the interest rate this year is already priced in market valuation. Consequently, the rise in the Fed fund rate, which was in line with market’s expectation bolstered investors’ confidence in risky assets like equities.
The fundamentals of the U.S. economy remained strong. Furthermore, the economy will get more upside from the government’s $1.2 trillion infrastructure spending for the next eight years. Additionally, the White House wants the Congress to quickly pass legislation, providing $52 billion to help computer chip manufacturers and ease the shortage of the components vital to many industries. Going forward, these will be the key driver of the U.S. economy.
Several stocks have gained in the past four weeks. Notable among them are — Lantheus Holdings Inc. LNTH, Alpha Metallurgical Resources Inc. AMR, PDC Energy Inc. PDCE, CONSOL Energy Inc. CEIX and Bancolombia S.A. CIB.
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: 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 just 19.
Let’s discuss our five picks out of the 19 stocks:
Lantheus Holdings is involved in developing, manufacturing, selling and distributing diagnostic medical imaging agents and products for the diagnosis of cardiovascular and other diseases. LNTH serves to hospitals, clinics, group practices, integrated delivery networks, group purchasing organizations, radiopharmacies and wholesalers.
The stock price of Lantheus Holdings has soared 92.4% in the past four weeks. LNTH has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved more than 100% over the last 30 days.
Alpha Metallurgical Resources is a mining company that produces, processes, and sells met and thermal coal in Virginia and West Virginia. AMR supplies metallurgical products to the steel industry.
The stock price of Alpha Metallurgical Resources has jumped 36.8% in the past four weeks. AMR has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 43.9% over the last 30 days.
PDC Energy is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids in the United States. The SRC Energy deal in 2020 has made PDCE the second-largest oil producer in the DJ Basin to go with its existing Delaware acreage.
PDC Energy has a favorable debt maturity profile with little in near-term due, while a disciplined approach to capital spending together with surging oil and natural gas prices should boost cumulative free cash flow generation to $2.7 billion in 2022 and 2023.
The stock price of PDC Energy has climbed 31.3% in the past four weeks. PDCE has an expected earnings growth rate of 67.8% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.7% over the last 7 days.
CONSOL Energy produces and exports bituminous coal in the United States. CEIX operates through PAMC, CONSOL Marine Terminal, and Other segments. CONSOL Energy is engaged in the mining, preparation and marketing of bituminous coal to power generators, industrial end-users, and metallurgical end-users; and provision of coal export terminal services, as well as development of the Itmann Mine and the Greenfield reserves.
The stock price of CONSOL Energy has surged 23.4% in the past four weeks. CEIX has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 45% over the last 30 days.
Bancolombia provides various banking products and services to individual and corporate customers in Colombia, Panama, Puerto Rico, El Salvador, Costa Rica, and Guatemala. CIB operates through nine segments: Banking Colombia, Banking Panama, Banking El Salvador, Banking Guatemala, Trust, Investment Banking, Brokerage, International Banking, and All Other.
The stock price of Bancolombia has advanced 16.7% in the past four weeks. CIB has an expected earnings growth rate of 17.1% for the current year. The Zacks Consensus Estimate for current-year earnings improved 21.7% 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 to day. 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.
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Alpha Metallurgical Resources, Inc. (AMR) : Free Stock Analysis Report
PDC Energy, Inc. (PDCE) : Free Stock Analysis Report
BanColombia S.A. (CIB) : Free Stock Analysis Report
Lantheus Holdings, Inc. (LNTH) : Free Stock Analysis Report
Consol Energy Inc. (CEIX) : Free Stock Analysis Report
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