Wall Street is firing on all cylinders since the beginning of this year, breaking one record after another. It seems that the bulls have no intention of taking a breather after completing the best year in the last six years. This year’s momentum starts from where it ended in 2019.
Notably, in the first 12 trading days of this year, the S&P 500 and the Nasdaq Composite scored fresh closing highs half of the time. During these days, the Dow, the S&P 500 and Nasdaq Composite surpassed the respective key technical barriers of 29,000, 3,300 and 9,000.
For the week ended Jan 17, all three major indexes posted their largest percentage gains since the week ended Aug 30, 2018. The Dow finished in the positive territory in five of the past six weeks, the S&P 500 ended in the green for two successive weeks and the Nasdaq Composite maintained its winning streak for six straight weeks.
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 eight.
Here we present five stocks out of the eight:
Forterra Inc. FRTA manufactures and sells pipe and precast products in the United States, Canada, and Mexico. It operates through Drainage Pipe & Products and Water Pipe & Products segments.
The stock price has rallied 20.5% in the past four weeks. The company has an expected earnings growth rate of 680% for the current year. The Zacks Consensus Estimate for the current year has improved by 141.7% over the past 30 days.
SYNNEX Corp. SNX provides business process services in the Americas, Asia-Pacific, Europe and Africa. It operates in two segments, Technology Solutions and Concentrix.
The stock price has jumped 13.9% in the past four weeks. The company has an expected earnings growth rate of 5.4% for the current year. The Zacks Consensus Estimate for the current year has improved 5.8% over the past 30 days.
Sony Corp. SNE designs, manufactures and sales several consumer and industrial electronic equipment. It offers audio and video equipment, televisions, displays, semiconductors, electronic components, gaming consoles, computers and computer peripherals and telecommunication equipment
The stock price has climbed 6.5% in the past four weeks. The company has an expected earnings growth rate of 15.2% for the current year. The Zacks Consensus Estimate for the current year has improved 0.9% over the past 30 days.
Eagle Bancorp Montana Inc. EBMT operates as a holding company for American Federal Savings Bank that provides retail banking services in the south central portion of Montana.
The stock price has surged 5.9% in the past four weeks. The company has expected earnings growth of 11.6% for the current year. The Zacks Consensus Estimate for the current year has improved 1% over the past 30 days.
Taiwan Semiconductor Manufacturing Co. Ltd. TSM is engaged in manufacturing, selling, packaging, testing, and computer-aided design of integrated circuits and other semiconductor devices.
The stock price has advanced 0.6% 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 10% in 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 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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Sony Corporation (SNE) : Free Stock Analysis Report
Eagle Bancorp Montana, Inc. (EBMT) : Free Stock Analysis Report
FORTERRA INC (FRTA) : Free Stock Analysis Report
SYNNEX Corporation (SNX) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
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