“In the stock game, winning means reaching a higher price.” However, striking the right chord each time needs a fair amount of luck.
No matter how disciplined and systematic investors are, equity market volatility will always manage to get the better of them. While a few lucky ones rake in the moolah, others fall victim to ad hoc strategies.
One could resort to commonly used techniques to find beaten down stocks that have the potential to recover faster than others. However, even such investment choices bear the risk of disappointment. Particularly, one could fall into the value trap if the hidden weaknesses in selected stock are not identified.
So, 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 the 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: 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 universe from over 7,700 stocks to just five.
Here we present those five stocks:
L.B. Foster Co. FSTR is engaged in the manufacture, fabrication and distribution of rail and trackwork, piling, highway products and tubular products. The company’s stock price has advanced 13% in the past four weeks. It has expected earnings growth of 65.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 14.8% over the last 60 days.
CECO Environmental Corp. CECE provides industrial air quality and fluid handling systems for the energy, industrial and other markets worldwide. It operates through three segments -- Energy Solutions, Environmental Solutions, and Fluid Handling and Filtration Solutions. The company’s stock price has surged 1.9% in the past four weeks. It has expected earnings growth of 82.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 6% over the last 60 days.
Meridian Bancorp Inc. EBSB operates as the holding company for East Boston Savings Bank that provides various financial products and services for individuals and businesses primarily in Suffolk, Norfolk, Middlesex and Essex Counties, Massachusetts. The company’s stock price has risen 7.6% in the past four weeks. It has expected earnings growth of 20.8% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.6% in the last 60 days.
OFG Bancorp OFG provides various banking and financial services. It operates in three segments: Banking, Wealth Management, and Treasury. The company’s stock price has increased 21.9% in the past four weeks. It has expected earnings growth of 14.5% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.6% over the last 60 days.
Everi Holdings Inc. EVRI provides technology solutions for the casino gaming industry in the United States, Europe, Canada, the Caribbean, Central America, and Asia. The company operates in two segments, Games and FinTech. The company’s stock price has advanced 2.8% in the past four weeks. It has expected earnings growth of 210% for the current year. The Zacks Consensus Estimate for the current year has improved by 3.3% in the last 60 days.
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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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Everi Holdings Inc. (EVRI) : Free Stock Analysis Report
OFG Bancorp (OFG) : Free Stock Analysis Report
Meridian Bancorp, Inc. (EBSB) : Free Stock Analysis Report
CECO Environmental Corp. (CECE) : Free Stock Analysis Report
L.B. Foster Company (FSTR) : Free Stock Analysis Report
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