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5 Stocks With Recent Price Strength Amid Severe Volatility

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U.S. stock markets have been witnessing severe volatility almost daily since mid-January. The anticipation of a tougher-than-expected stand by the Fed in March to combat soaring inflation has dented investors’ confidence significantly.

The consumer price index for January rose 7.5% year over year, leading a large section of economists and financial researchers to predict a 50 basis-point hike in the benchmark lending rate in March instead of the market’s expectation of a 25 basis-point hike.

Some investment bankers have also said that the central bank may raise the interest rate seven times this year with a magnitude of 25 basis points each time. Consequently, the yield on the benchmark 10-Year U.S. Treasury Note climbed more than 2%. The yield was 1.5% at the beginning of 2022.

The situation worsened after the White House warned on Feb 11 that Russia might enter the geographical territory of Ukraine soon. Any American still in Ukraine should leave “immediately,” the White House said.

On Feb 15, the Russian Ministry of Defense announced that some Russian military units had started returning to the barracks after completing the drills near the Ukraine border. However, on Feb 16, NATO told Russia that there was no evidence that its troops were moving back. Instead, NATO accused Russia of increasing the deployment of its forces near the Ukraine broader.

Despite economic and political conflicts several stocks have gained in the past four weeks. Notable among them are — Stonex Group Inc. SNEX, Danaos Corp. DAC, Concentrix Corp. CNXC, Allegheny Technologies Inc. ATI and Build-A-Bear Workshop Inc. BBW.

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 12.

Let’s discuss our five picks out of the 12 stocks:

Stonex Group is a financial services organization. SNEX operates in six areas, namely, commercial hedging, global payments, securities, physical commodities, foreign exchange and clearing and execution services.

The stock price of Stonex Group has jumped 24.9% in the past four weeks. SNEX has an expected earnings growth rate of 5.9% for the current year (ending September 2022). The Zacks Consensus Estimate for current-year earnings has improved 8.7% over the past 30 days.

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 climbed 21.6% in the past four weeks. DAC has an expected earnings growth rate of 71.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 40.5% over the past 30 days.

Concentrix is a business services company specializing in customer engagement and business performance. CNXC serves technology & consumer electronics; retail, travel & ecommerce; banking, financial services & insurance; healthcare; communications & media; automotive; and energy & public sector.

The stock price of Concentrix has appreciated 21.1% in the past four weeks. CNXC has an expected earnings growth rate of 20.1% for the current year (ending November 2022). The Zacks Consensus Estimate for current-year earnings has improved 9.85% over the past 30 days.

Allegheny Technologies is a diversified specialty materials producer. ATI is likely to benefit from strength in the high-performance Materials & Components segment and demand growth in the Forgings business.  Higher selling prices and increased market demand are also driving results in the Advanced Alloys & Solutions unit.

Allegheny Technologies is also focused on improving cost structure.  The company has efficiently managed capital expenditure, by adjusting its capital spending to meet the new demand levels.  ATI is in the process of finishing several self-funded capital projects. ATI’s exit from low-margin standard stainless sheet products is also expected to drive margins in the AA&S segment.

The stock price of Allegheny Technologies has risen 18% in the past four weeks. ATI has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 25% over the past 30 days.

Build-A-Bear sells teddy bears and other stuffed animals and characters. Customers go through an interactive process in which the stuffed animal of their choice is assembled and tailored to their preferences during their visit to the store. These preferences include numerous different stuffed animals, along with varying scents, sounds, and outfits. Build-A-Bear Workshop is the largest chain that operates in this style.

The stock price of BBW has advanced 16.2% in the past four weeks. Build-A-Bear has an expected earnings growth rate of 9.9% for the current year (ending January 2023). The Zacks Consensus Estimate for current-year earnings has improved 8.9% over the past 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.

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.


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Allegheny Technologies Incorporated (ATI) : Free Stock Analysis Report
 
BuildABear Workshop, Inc. (BBW) : Free Stock Analysis Report
 
Danaos Corporation (DAC) : Free Stock Analysis Report
 
Concentrix Corporation (CNXC) : Free Stock Analysis Report
 
StoneX Group Inc. (SNEX) : Free Stock Analysis Report
 
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