5 Stocks With Recent Price Strength Amid Wall Street Turmoil
Wall Street has been suffering since the beginning of 2022 after finishing two successive impressive years despite being pandemic-ridden. Market participants are highly concerned about soaring inflation. Moreover, the Fed's uncertainty regarding the pace and magnitude of an interest rate hike to contain inflation has injected severe fluctuations in day-to-day trading since mid-January.
On Jan 26, after the conclusion of the first Fed FOMC meeting of this year, Chairman Jerome Powell signaled the first rate hike in three years in as early as in March. The central bank’s quantitative easing program will also come to an end in March.
Although the Fed refrained from stating the month and magnitude of the interest rate hike, Powell said, “Inflation risks are still to the upside in the views of most FOMC participants, and certainly in my view as well. There’s a risk that the high inflation we are seeing will be prolonged. There’s a risk that it will move even higher.”
The Fed Chairman further added, “In light of the remarkable progress we’ve seen in the labor market and inflation that is well-above our 2% long-run goal, the economy no longer needs sustained high levels of monetary policy support.”
In a separate press statement, the FOMC has also indicated that the Fed is thinking of shrinking its $9 trillion balance sheet later this year. Powell said, “There’s a substantial amount of shrinkage in the balance sheet to be done. That’s going to take some time. We want that process to be orderly and predictable.”
Several stocks have gained in the past four weeks. Notable among them are — Danaos Corp. DAC, Earthstone Energy Inc. ESTE, Hanmi Financial Corp. HAFC, Archer-Daniels-Midland Co. ADM and Vertex Pharmaceuticals Inc. VRTX.
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 just seven.
Let’s discuss our five picks out of the seven stocks:
Danaos is a leading international owner of containerships, chartering vessels to many of the world's largest liner companies. Having consistently developed sea transport services throughout its history, Danaos has forged a reputation for high-quality operational support to liner companies and other charterers throughout the world.
DAC currently has a fleet of containerships aggregating TEU, making it one of the largest containership charter owners in the world.
The stock price of Danaos has jumped 22.5% in the past four weeks. DAC has an expected earnings growth rate of 71.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 7 days.
Earthstone Energy is a growth-oriented independent energy company engaged in developing and operating oil and gas properties. ESTE’s primary assets are located in the Midland Basin of west Texas and the Eagle Ford trend of south Texas.
The stock price of Earthstone Energy has climbed 21.1% in the past four weeks. ESTE has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.9% over the last 30 days.
Hanmi Financial operates as the holding company for Hanmi Bank that provides business banking products and services in the United States. HAFC offers various deposit products, including noninterest-bearing checking accounts, interest-bearing checking and savings accounts, negotiable order of withdrawal accounts, money market accounts, and certificates of deposit.
The stock price of Hanmi Financial has appreciated 12.3% in the past four weeks. Although HAFC has a negative expected earnings growth for the current year, the Zacks Consensus Estimate for current-year earnings has improved 8.4% over the last 7 days.
Archer-Daniels-Midland is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. ADM processes oilseeds, corn, wheat, cocoa and other feedstuffs.
Moreover, Archer-Daniels-Midland is engaged in the manufacturing, sale, and distribution of products like natural flavor ingredients, flavor systems, natural colors, proteins, emulsifiers, soluble fiber, polyols, hydrocolloids, natural health and nutrition products as well as other specialty food and feed ingredients.
The stock price of ADM has advanced 12.3% in the past four weeks. Although Archer-Daniels-Midland has a negative expected earnings growth for the current year, the Zacks Consensus Estimate for current-year earnings has improved 3.8% over the last 7 days.
Vertex’s cystic franchise sales continue to grow despite the impact of the pandemic. Trikafta/Kaftrio’s early approval/launch was a significant milestone. New reimbursement agreements in ex-U.S. markets and label expansions to younger age groups in United States are driving VRTX’s Trikafta/Kaftrio sales higher.
Vertex’s non-CF pipeline is progressing rapidly with data from multiple programs expected in the next few months. Vertex faces only minimal competition in its core CF franchise. Vertex has collaborations with several companies.
The stock price of VRTX has surged 10.7% in the past four weeks. Vertex has an expected earnings growth rate of 4.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.2% over the last 7 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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Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
Hanmi Financial Corporation (HAFC) : Free Stock Analysis Report
Danaos Corporation (DAC) : Free Stock Analysis Report
Earthstone Energy, Inc. (ESTE) : Free Stock Analysis Report
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