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5 Stocks With Recent Price Strength to Tap Wall Street Rally

Nalak Das

Wall Street's new bull market that started in mid-April, ending the coronavirus-induced short bear market, has gathered pace from last week. After a fabulous April, Wall Street is on track to close this month in positive territory, defying the well-known financial-world adage "Sell in May and go away".

Month to date, these three indexes are up 4.9%, 4.3% and 5.9%, respectively. Besides these three large-cap centric indexes, the small-cap specific Russell 2000 Index is performing strongly in May with a gain of 9.6% so far.

Gradual reopening of the U.S. and global economy, recently released better-than-expected economic data, positive developments on vaccines for COVID-19 and an unprecedented stimulus package injected by the United States and other major economies are fueling the new bull market.

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 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.

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 have narrowed down the search from over 7,700 stocks to just 10.

Here we present five out of those 10 stocks:

Minerva Neurosciences Inc. NERV is a clinical-stage biopharmaceutical company engaged in the development and commercialization of a portfolio of product candidates for the treatment of central nervous system diseases.

The stock has jumped 61.5% in the past four weeks. The company has expected earnings growth of 45.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 12.9% over the last 30 days.

Liquidia Technologies Inc. LQDA is a late-stage, clinical biopharmaceutical company, focuses on the development and commercialization of novel products utilizing its proprietary PRINT technology to transform the lives of patients. 

The stock price has soared 60.6% in the past four weeks. The company has expected earnings growth of 7.3% for the current year. The Zacks Consensus Estimate for the current year has improved by 7.7% over the last 30 days.

Calix Inc. CALX provides cloud and software platforms, and systems and services required to deliver the unified access network in the United States, the Middle East, Canada, Europe, the Caribbean and internationally.

The stock price has climbed 17.1% in the past four weeks. The company has expected earnings growth of 266.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 22.2% over the last 30 days.

Avenue Therapeutics Inc. ATXI is a specialty pharmaceutical company that acquires, licenses, develops, and commercializes products primarily for use in the acute/intensive care hospital setting.

The stock price has surged 16.5% in the past four weeks. The company has expected earnings growth of 64.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 21.3% over the last 30 days.

The ExOne Co. XONE develops, manufactures, and markets 3D printing machines, 3D printed and other products, materials and services to industrial customers primarily in the Americas, Europe, the Middle East, Africa and Asia Pacific regions.

The stock price has gained 10.9% in the past four weeks. The company has expected earnings growth of 15.1% for the current year. The Zacks Consensus Estimate for the current year has improved by 9.2% 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.