For Immediate Release
Chicago, IL – April 23, 2018 - Stocks in this week’s article ICU Medical, Inc. ICUI, KAR Auction Services, Inc. (KAR,Sony Corporation SNE, Goldman Sachs Group, Inc. GS and United Natural Foods, Inc. UNFI.
Rely on Driehaus Strategy and Buy These 5 Momentum Stocks
Investors with high risk-tolerance can invest in momentum stocks in order to maximize their returns. In this context, the Driehaus strategy is used to select the best momentum stocks by using the “buy high and sell higher" principle. Following the success of the strategy, Richard Herman Driehaus earned his place in Barron’s All-Century Team.
The American Association of Individual Investors (AAII) proved that the strategy has the potential to offer high returns. AAII’s portfolio, which was developed following the strategy, returned 13.5% and 18.1% in the five- and 10-year time frames, respectively, compared with -1.1% and 4.2% gains registered by the S&P 500. Thus investors with a high risk appetite may opt for this strategy to boost their portfolio returns.
A Detailed Look into the Driehaus Strategy
Regarding the strategy, Driehaus once said: “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in a decline and try to guess when it will turn around.” In line with this insight, AAII took into account the percentage 50-day moving average as one of the key criteria before creating a portfolio following Driehaus’ philosophy.
It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator — positive relative strength — has also been included in this strategy. A positive percentage 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.
Moreover, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was made to provide better returns over the long term.
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Sony Corporation (SNE) : Free Stock Analysis Report
The Goldman Sachs Group, Inc. (GS) : Free Stock Analysis Report
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
ICU Medical, Inc. (ICUI) : Free Stock Analysis Report
KAR Auction Services, Inc (KAR) : Free Stock Analysis Report
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