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Compagnie Financiere Richemont AG (CFRUY) is a Great Momentum Stock: Should You Buy?

Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Compagnie Financiere Richemont AG (CFRUY), which currently has a Momentum Style Score of A. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.

It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Compagnie Financiere Richemont AG currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market?

Let's discuss some of the components of the Momentum Style Score for CFRUY that show why this company shows promise as a solid momentum pick.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area.

For CFRUY, shares are up 3.91% over the past week while the Zacks Retail - Jewelry industry is up 1.4% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 19.47% compares favorably with the industry's 7.32% performance as well.

While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Compagnie Financiere Richemont AG have increased 46.95% over the past quarter, and have gained 9.22% in the last year. In comparison, the S&P 500 has only moved 7.28% and -4.41%, respectively.

Investors should also pay attention to CFRUY's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. CFRUY is currently averaging 322,156 shares for the last 20 days.

Earnings Outlook

The Zacks Momentum Style Score also takes into account trends in estimate revisions, in addition to price changes. Please note that estimate revision trends remain at the core of Zacks Rank as well. A nice path here can help show promise, and we have recently been seeing that with CFRUY.

Over the past two months, 2 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost CFRUY's consensus estimate, increasing from $0.65 to $0.70 in the past 60 days. Looking at the next fiscal year, 2 estimates have moved upwards while there have been no downward revisions in the same time period.

Bottom Line

Given these factors, it shouldn't be surprising that CFRUY is a #2 (Buy) stock and boasts a Momentum Score of A. If you're looking for a fresh pick that's set to soar in the near-term, make sure to keep Compagnie Financiere Richemont AG on your short list.

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Compagnie Financiere Richemont AG (CFRUY) : Free Stock Analysis Report

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Zacks Investment Research