After commencing the year on a bright note, Wall Street had a good run right up to the middle of February before losing track completely on account of the coronavirus pandemic, which was first detected in China.
This outbreak compelled several developed nations, including the United States, and major emerging economies to resort to either full or partial lockdown to curb the spread of the deadly virus. In fact, volatility is likely to persist in April as the panoptic impact of the coronavirus outbreak is yet to be realized in the United States and globally.
However, despite the severe volatility at the moment, Wall Street is expected to stabilize slowly after a few weeks as the rate of growth of the infected people is likely to reach its highest within that period. In fact, some of the stocks have remained unaffected by the market bloodbath.
At this stage, wouldn’t it be a safer strategy to look for stocks that are winners currently and have the potential to gain further?
Sounds good? Here’s how to execute it:
One should primarily target stocks that have recently 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.
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 eight.
Here we present five out of those eight stocks:
Electromed Inc. ELMD develops, manufactures, markets, and sells airway clearance therapy and related products that apply high frequency chest wall oscillation therapy in pulmonary care for patients of all ages in the United States and internationally. The stock price has rallied 30.4% in the past four weeks. The company has an expected earnings growth of 82.6% for the current year (ending June 2020).
NovaGold Resources Inc. NG is a gold and copper company engaged in the exploration and development of mineral properties in Alaska and Western Canada. The stock price has jumped 23.4% in the past four weeks. The company has an expected earnings growth of 11.1% for the current year (ending November 2020).
FTI Consulting Inc. FCN is a global business advisory firm aimed at helping organizations manage change, mitigate risk and resolve financial, legal, operational, political and regulatory, reputational and transactional disputes. The stock price has climbed 15.9% in the past four weeks. The company has an expected earnings growth of 5.4% for the next year.
Eli Lilly and Co. LLY discovers, develops, manufactures, and markets pharmaceutical products worldwide. It offers endocrinology products for diabetes; osteoporosis in postmenopausal women and men; and human growth hormone deficiency and paediatric growth conditions. The stock price has advanced 4.1% in the past four weeks. The company has an expected earnings growth of 12.1% for the current year.
Masimo Corp. MASI is a medical technology company, develops, manufactures, and markets noninvasive monitoring technologies and hospital automation solutions worldwide. The stock price has gained 1.1% in the past four weeks. The company has an expected earnings growth of 10.3% for the current year.
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.
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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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Masimo Corporation (MASI) : Free Stock Analysis Report
FTI Consulting, Inc. (FCN) : Free Stock Analysis Report
Eli Lilly and Company (LLY) : Free Stock Analysis Report
Electromed, Inc. (ELMD) : Free Stock Analysis Report
Novagold Resources Inc. (NG) : Free Stock Analysis Report
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