Investors generally gauge a stock’s potential return by examining earnings growth and valuation multiples. At the same time, it’s important to measure the performance of such a stock relative to its industry or peers, or the appropriate benchmark.
If you see that a stock is underperforming on fundamental factors, then it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance to provide considerable returns.
Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 over a period of 1 to 3 months at the least and having solid fundamentals indicate room for growth, and are the best ways to go about this strategy.
Finally, it is important to find out whether analysts are optimistic about the upcoming earnings results of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.
Relative % Price change – 12 weeks greater than 0
Relative % Price change – 4 weeks greater than 0
Relative % Price change – 1 week greater than 0
(We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, 4 weeks and 1 week.)
% Change (Q1) Est. over 4 Weeks greater than 0: Positive current quarter estimate revisions over the last four weeks.
Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks – that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years – can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity.
VGM Score less than or equal to B: Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or #2 (Buy) offer the best upside potential.
Here are five of the nine stocks that made it through the screen:
GATX Corp. GATX: Headquartered in Chicago, IL, GATX leases, operates and manages long-lasting, widely used assets in rail, marine and industrial equipment markets. The company has a VGM score of “A” and an excellent earnings surprise history. It surpassed estimates in each of the last four quarters at an average rate of 16.56%.
The Chemours Company CC: A global chemical company specializing in the production of titanium dioxide, fluoroproducts and chemical solutions, Wilmington, DE-based The Chemours Company has a VGM score of “A”. Over the past 30 days, the Zacks Consensus Estimate for 2016 and 2017 increased 12% and 3%, respectively, to 95 cents and $1.53 per share.
AngioDynamics Inc. ANGO: Headquartered in Latham, NY, AngioDynamics designs, manufactures and sells a wide range of medical, surgical and diagnostic devices to be used in used in minimally invasive, image-guided procedures. The company has a VGM score of “A” and surprised earnings to the upside in each of the last three quarters.
Koppers Holdings Inc. KOP: Founded in 1912 and based in Pittsburgh, PA, Koppers Holdings produces carbon compounds and treated wood products that serve the aluminum, railroad, specialty chemicals, utility, rubber and steel industries. The 2016 Zacks Consensus Estimate for this company is $2.15, representing 42.22% earnings per share growth over 2015. The next year’s average forecast is $2.66, pointing to 23.75% growth. Koppers Holdings has a VGM score of “A”.
Standard Motor Products Inc. SMP: Standard Motor Products is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. Sporting a VGM score of “A”, this Long Island City, NY headquartered company’s expected EPS growth rate for 3 to 5 years is currently 15% –– comfortably ahead of the industry growth rate of 12.30%.
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.
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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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STANDARD MOTOR (SMP): Free Stock Analysis Report
KOPPERS HOLDNGS (KOP): Free Stock Analysis Report
ANGIODYNAMICS (ANGO): Free Stock Analysis Report
CHEMOURS COMPNY (CC): Free Stock Analysis Report
GATX CORP (GATX): Free Stock Analysis Report
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