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5 Stocks With Recent Price Strength to Tap Market Rally

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Nalak Das
·6 min read
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Wall Street had an impressive 2020 defying the global outbreak of  the novel coronavirus. The stock market rally, which started during the pandemic-ridden April, continued till December, barring some fluctuations in September and October. The rally is likely to last through January and thereafter primarily due to three factors mentioned below.

First, the FDA authorization of two COVID-19 vaccines in December 2020 means that the economy will reopen and gradually operate at the pre-pandemic level. Since the lockdowns imposed in March, the U.S. economy is operating at a significant sub-optimal level.

Second, the U.S. Congress has reached an agreement on the next round of fiscal stimulus for pandemic-led devastations. Major components of the $900 billion package include a direct payment of $600 for every adult and child and approximately $300 billion of the small business paycheck protection program.

Third, an effective control of the U.S. Congress by the Democrats is likely to result in higher fiscal stimulus and quicker implementation of nationwide vaccination in order to curb the pandemic along with higher allotment of funds for infrastructural developments in the near future.

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 freshly 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 20.

Here we present five out of those 20 stocks:

Azure Power Global Ltd. AZRE is engaged in the development, construction, ownership, operation, maintenance, and management of solar power plants in India.

The stock price has soared 49% in the past four weeks. The company has an expected earnings growth rate of 70.2% for the current year (ending March 2021). The Zacks Consensus Estimate for the current year has improved 56.8% over the last 60 days.

Mueller Industries Inc. MLI manufactures and sells copper, brass, aluminum, and plastic products in the United States, the United Kingdom, Canada, South Korea, the Middle East, China, and Mexico.

The stock price has jumped 16.6% in the past four weeks. The company has expected earnings growth of 17% for the current year. The Zacks Consensus Estimate for the current year has improved  more than 100% over the last 30 days.

H&E Equipment Services Inc. HEES is one of the largest integrated equipment services companies in the United States. It operates in five segments: Equipment Rentals, New Equipment Sales, Used Equipment Sales, Parts Sales, and Repair and Maintenance Services.

The stock price has climbed 15.5% in the past four weeks. The company has expected earnings growth of 35.5% for the current year. The Zacks Consensus Estimate for the current year has improved by 5.8% over the last 30 days.

Korea Electric Power Corp. KEP is an integrated electric utility company that generates, transmits, and distributes electricity in South Korea and internationally. It operates through the Transmission and Distribution, Electric Power Generation (Nuclear), Electric Power Generation (Non-nuclear), Plant Maintenance & Engineering Service, and Others segments.

The stock price has advanced 13.1% in the past four weeks. The company has expected earnings growth of 38.4% for the current year. The Zacks Consensus Estimate for the current year has improved by 30.5% over the last 30 days.

InMode Ltd. INMD designs, develops, manufactures, and markets minimally-invasive aesthetic medical products based on its proprietary radio frequency assisted lipolysis and deep subdermal fractional radio frequency technologies.

The stock price has surged 12.4% in the past four weeks. The company has expected earnings growth of 28.1% for the current year. The Zacks Consensus Estimate for the current year has improved 24.6% over the last 60 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.


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Korea Electric Power Corporation (KEP) : Free Stock Analysis Report
 
H&E Equipment Services, Inc. (HEES) : Free Stock Analysis Report
 
Mueller Industries, Inc. (MLI) : Free Stock Analysis Report
 
Azure Power Global Ltd. (AZRE) : Free Stock Analysis Report
 
InMode Ltd. (INMD) : Free Stock Analysis Report
 
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Zacks Investment Research