U.S. markets open in 7 hours 59 minutes

Zacks.com featured highlights include: Pilgrim's Pride, Cirrus Logic and Darling Ingredients

Zacks Equity Research

For Immediate Release

Chicago, IL – February 4, 2020 – Stocks in this week’s article are Pilgrim's Pride Corp. PPC, Cirrus Logic, Inc. CRUS and Darling Ingredients Inc. DAR.

3 Stocks with Momentum Anomaly to Buy Amid Coronavirus Scare

The Coronavirus epidemic, which originated in China, seems to have stumped the U.S. market rally that gave us spectacular gains last year, and pushed the major indexes to all-time record highs just a couple of weeks back. Market bulls see the current slowdown as nothing more than a temporary breather that will allow investors to take stock of the problem before resuming the surge. The other side of the divide is less optimistic about what’s happening in the market and sees this as the catalyst that will result in a long overdue market downturn.

On the other hand, China’s central bank said that it will pump $174 billion worth of liquidity by way of reverse repo as the stock market reopens on Monday. Investors are bracing for a volatile session when onshore trades resume after a break for the Lunar New Year, which was extended by the government. China’s stock, currency and bond markets have been closed since Jan 23.

Notably, the U.S. GDP growth has remained in the 2%-plus range over the last few quarters despite trade-centric uncertainties weighing on the factory sector. Economic growth should improve with the easing of trade issues following the signing of phase one of the U.S.-China trade deal, and the USMCA trade deal.

Earnings growth was anemic in 2019, primarily because of the tough comparisons to the all-time record corporate profits the year before, which had received a boost from the tax cut legislation. But growth is likely to resume in the first quarter of 2020, and accelerate in the second half of the year. Analysts expect company earnings to impress on the back of robust business investment and emerging market economies.

However, concerns about the impact of higher corporate taxes on profits could rise in the run up to the U.S. presidential election. This apart, rising wages are likely to reduce profit margins over the next several years. The Fed left interest rates unchanged last week and will likely remain on the sidelines for now. But, the outlook beyond the U.S. shores is a lot less positive, with concerns about growth momentum in China, India, Germany and other key markets.

Against this macro backdrop, reacting emotionally to volatile trends can cause more damage to a portfolio’s return than a downturn. When value or growth investing fails to fetch sustained profits, one should explore another time-tested winning strategy that simply bets on the frontrunner stocks. This is known as momentum investing.

At the core, momentum investing is buying high, selling higher. It is based on the idea that once a stock establishes a trend, it is likely to continue in that direction. There’s a whole list of behavioral biases that most investors exhibit. For instance, there are investors who are anxious about booking losses and hence hold on to losing stocks for too long, hopeful of a rebound in prices.

On the other hand, a few investors sell their winners way too early. Momentum investing is one of the best strategies to avoid making such mistakes. So, basically, it’s a way to profit from the general human tendency to extrapolate current trends into the future. Momentum investing is, thus, based on that gap in time, which exists before the mean reversion occurs i.e. before prices become rational again.

Here, we have created a strategy that will help investors get in on these fast movers when there is a short-term pullback in price, and rake in handsome gains.

For the rest of this Screen of the Week article please visit Zacks.com at:https://www.zacks.com/stock/news/746711/3-stocks-with-momentum-anomaly-to-buy-amid-coronavirus-scare

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.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine.  But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.

Follow us on Twitter:  https://twitter.com/zacksresearch

Join us on Facebook:  https://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Contact: Jim Giaquinto

Company: Zacks.com

Phone: 312-265-9268

Email: pr@zacks.com

Visit: www.Zacks.com

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

 

 

 

                                                                                     


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Cirrus Logic, Inc. (CRUS) : Free Stock Analysis Report
 
Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report
 
Darling Ingredients Inc. (DAR) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research