Wall Street had a dream run in 2019 wherein the benchmark S&P 500 and tech-heavy Nasdaq Composite Index recorded the highest gains since 2013 while the blue-chip Dow Index closed 2019 with its biggest yearly percentage gain since 2017.
However, the stock markets retreated on Jan 3 after the U.S. airstrikes in Iran that killed its military general Qasem Soleimani. However, Wall Street recovered the next trading day on Jan 6.
The Wall Street bull run is likely to continue in this year buoyed by an expected interim trade deal between the United States and China. A stable domestic economy is the biggest positive for U.S. stocks. Moreover, an accommodative Fed is likely to be a cushion for stock markets.
At this stage, 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 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 have narrowed down the search from over 7,700 stocks to just 12.
Here we present five stocks out of the 12:
Cassava Sciences Inc. SAVA is a clinical-stage drug development company, focusing on nervous system disorders. Its lead therapeutic product candidate PTI-125, a small molecule drug, is in phase II clinical trial for the treatment of Alzheimer's disease.
The company’s stock price has surged 416.8% in the past four weeks. It has an expected earnings growth rate of 396.9% for the current year. The Zacks Consensus Estimate for the current year has improved 8% over the past 60 days.
The Rubicon Project Inc. RUBI provides technology solutions to automate the purchase and sale of digital advertising inventory for buyers and sellers in the United States and internationally. It offers applications and services for digital advertising inventory sellers, including websites, mobile applications and other digital media properties.
The stock price has advanced 23% in the past four weeks. The company has an expected earnings growth rate of 211.1% for the current year. The Zacks Consensus Estimate for the current year has improved 900% over the past 60 days.
Talos Energy Inc. TALO is engaged in the exploration, development and production of oil and natural gas properties. It operates primarily in the Gulf of Mexico and in the shallow waters off the coast of Mexico.
The stock price has advanced 21.7% in the past four weeks. The company has an expected earnings growth rate of 7.1% for the current year. The Zacks Consensus Estimate for the current year has improved 11% over the past 60 days.
Teekay Tankers Ltd. TNK provides marine transportation services to oil industries in Bermuda and internationally. It operates through two segments, Conventional Tanker and Ship-to-ship Transfer.
The stock price has advanced 21.4% in the past four weeks. The company has expected earnings growth of 180.9% for the current year. The Zacks Consensus Estimate for the current year has improved 52.7% over the past 60 days.
Karyopharm Therapeutics Inc. KPTI is engaged in the discovery, development and commercialization of various drugs directed against nuclear export and related targets for the treatment of cancer and other diseases.
The stock price has gained 16.2% in the past four weeks. It has an expected earnings growth rate of 35.5% for the current year. The Zacks Consensus Estimate for the current year has improved 90% in the past 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.
Click to get this free report Teekay Tankers Ltd. (TNK) : Free Stock Analysis Report The Rubicon Project, Inc. (RUBI) : Free Stock Analysis Report Karyopharm Therapeutics Inc. (KPTI) : Free Stock Analysis Report Pain Therapeutics (SAVA) : Free Stock Analysis Report Stone Energy Corporation (TALO) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research