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Scoop Up These 5 Stocks Reflecting Relative Price Strength

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·4 min read
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Earnings growth and valuation multiples are indeed important for investors to determine a stock's ability to offer considerable returns. But these are also essential for determining whether a stock’s price performance is better than its peers or the industry average.

If a stock’s performance is lacking that of the broader groups despite impressive earnings growth or valuation multiples, then something must be wrong.

It’s always advisable to stay away from these stocks and bet on those that are outperforming their respective industry or benchmark. This is because betting on a winner always proves to be lucrative.

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 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 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.

Screening Parameters

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, four weeks and one 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 15 stocks that made it through the screen:

CNH Industrial N.V. CNHI: Founded in 2012 and headquartered in London, UK, CNH Industrial is a leading global manufacturer of agriculture and transportation machinery. The company has a VGM Score of A and an excellent earnings surprise history. It surpassed estimates in each of the last four quarters, delivering an earnings surprise of 179.72%, on average.

Nutrien Ltd NTR: It is one of the world’s largest producers of fertilizer products.  Nutrien has a VGM Score of A. Over the past 60 days, this Saskatoon, SK-based firm has seen the Zacks Consensus Estimate for 2021 improve 31.5%.

WESCO International, Inc. WCC: WESCO International is one of the top distributors of electrical construction products in North America. The 2021 Zacks Consensus Estimate for this Pittsburgh, PA-based firm indicates 100.69% earnings per share growth over 2020. WESCO has a VGM Score of B.

Macy’s, Inc. M: Macy’s is an omnichannel retail organization operating stores, websites and mobile applications. Carrying a VGM Score of A, this New York-based company’s expected EPS growth rate for three to five years is currently 12%, which compares favorably with the industry's growth rate of 10.9%.

Commercial Metals Company CMC: This Irving, TX-based firm manufactures, recycles and markets steel and metal products, related materials and services. Commercial Metals has a VGM Score of B and an excellent earnings surprise history of 17.51%, on average, for the last four quarters.

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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Macys, Inc. (M) : Free Stock Analysis Report
 
WESCO International, Inc. (WCC) : Free Stock Analysis Report
 
Commercial Metals Company (CMC) : Free Stock Analysis Report
 
CNH Industrial N.V. (CNHI) : Free Stock Analysis Report
 
Nutrien Ltd. (NTR) : Free Stock Analysis Report
 
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