5 Stocks With Recent Price Strength That Still Have Upside
Wall Street completed last month on a positive note despite volatility. In April, the Dow advanced 2.5%, marking its best month since January. The S&P 500 gained 1.5%, finishing the second positive month in a row. The Nasdaq Composite also rose marginally despite a weak start.
After a highly disappointing 2022, U.S. stocks markets remained in positive territory despite the threat of a near-term recession. Year to date, the Dow and the S&P 500 have advanced 1.6% and 7.3%, respectively. The Nasdaq Composite has rallied 15.4%.
The momentum of the U.S. stock markets is likely to sustain in May. The major driver of this month will be the Fed’s FOMC meeting scheduled on May 2 and 3, and the first-quarter 2023 earnings season.
In the post-FOMC statement in March, Fed Chairman Jerome Powell said that the central bank is approaching the end of its ongoing interest rate hike regime. The terminal rate is likely to be 5.125%, which means just one 25 basis-point rate hike from the existing range of 4.75-5%.
We are in the middle of the first-quarter 2023 earnings season. U.S. corporates have presented relatively good earnings results so far despite the threat of a recession later this year.
Our projection has shown that total earnings of the S&P 500 Index are set to decline 5.7% year over year on 2.8% higher revenues compared with a 10% year-over-year decline in earnings on 1.7% higher revenues, estimated at the beginning of the reporting cycle.
Recently, several stocks have shown price strength. We have selected five that are likely to gain in the near term backed by a favorable Zacks Rank. These companies are — Arcellx Inc. ACLX, Harrow Health Inc. HROW, PROG Holdings Inc. PRG, Chipotle Mexican Grill Inc. CMG and Meta Platforms Inc. META.
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 21.
Let’s discuss five out of these 21 stocks:
Arcellx is a clinical-stage biotechnology company, engaged in the development of various immunotherapies for patients with cancer and other incurable diseases. ACLX’s lead ddCAR product candidate is CART-ddBCMA, which is in phase 2 clinical trial for the treatment of patients with relapsed or refractory (r/r) multiple myeloma (MM).
ACLX is also developing ACLX-001, an immunotherapeutic combination composed of ARC-T cells and bi-valent SparX proteins targeting BCMA to treat r/r MM; ACLX-002 and ACLX-003 for treating r/r acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS); and product candidates for solid tumor programs.
The stock price of Arcellx has jumped 42.7% 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 more than 100% over the last 60 days.
Harrow Health is an eyecare pharmaceutical company, focused on the discovery, development, and commercialization of ophthalmic therapies. HROW offers ImprimisRx, an ophthalmology outsourcing and pharmaceutical compounded medications.
HROW also provides IHEEZO, a chloroprocaine hydrochloride ophthalmic gel; ophthalmic medicines, including IOPIDINE and MOXEZA and MAXITROL eye drops.
The stock price of Harrow Health has climbed 22.1% 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 more than 100% over the last 60 days.
PROG Holdings is a financial technology holding company, providing various payment options to consumers. PRG operates through three segments: Progressive Leasing, Vive Financial, and Four Technologies.
PRG offers e-commerce, app-based, and in-store point-of-sale lease-to-own solutions for merchandise, including furniture, appliances, electronics, jewelry, mobile phones and accessories, mattresses, and automobile electronics and accessories through third-party POS partner locations and e-commerce websites in 46 states, the District of Columbia, and Puerto Rico.
The stock price of PROG Holdings has surged 20% in the past four weeks. It has an expected earnings growth rate of 1.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 10.4% over the last seven days.
Chipotle Mexican Grill operates quick-casual and fresh Mexican food restaurant chains globally. CMG has been benefiting from its digital efforts, Chipotlane add-ons and marketing initiatives. These, along with strength in digital sales, rise in menu prices, new restaurant openings and higher restaurant-level operating margins have been aiding Chipotle.
Chipotle Mexican Grill reported solid benefits from Project Square One with improvements, including throughput on the frontline, on-time and accuracy on the digital make line. CMG also emphasizes testing changes to the smarter pickup times logic to boost growth.
The stock price of Chipotle Mexican Grill has appreciated 19.6% in the past four weeks. It has an expected earnings growth rate of 32.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.6% over the last seven days.
Meta Platforms is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased engagement for its products like Instagram, WhatsApp, Messenger and Facebook has been a major growth driver. META is considered to have pioneered the concept of social networking.
However, as developed regions mature, Meta Platforms has taken measures to drive penetration in emerging markets of South East Asia, Latin America and Africa. Of all places, India deserves a-special mention in terms of user growth. The world’s second-largest populated country offers tremendous potential for META. With China off the radar, India can prove to be a terrific growth engine for Meta.
The stock price of Meta Platforms has advanced 12.3% in the past four weeks. It has an expected earnings growth rate of 19.6% for the current year. The Zacks Consensus Estimate for current-year earnings improved 12.1% over the last seven 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
Harrow Health, Inc. (HROW) : Free Stock Analysis Report
Aaron's Holdings Company, Inc. (PRG) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
Arcellx, Inc. (ACLX) : Free Stock Analysis Report
