For Immediate Release
Chicago, IL – September 9, 2022 – Stocks in this week’s article are Target Hospitality Corp. TH, BancFirst Corp. BANF and Avis Budget Group, Inc. CAR.
3 Momentum Anomaly Picks as Markets Digest Rate Hike Fears
The broader equity indices appeared to shrug off the rate hike concerns to snap a recent losing streak amid the ongoing inflationary pressures. The uptrend was further buoyed by easing oil prices and resilient domestic economic strength. However, as the Fed vowed to continue its aggressive rate hike regime to curb inflation, latent forces kept the markets on tenterhooks amid the faltering bear market rally.
With uncertainty becoming the norm of the day, investors often seek to employ time-tested winning strategies to fetch sustained profits. One of the most successful game plans to beat the blues is to bet on momentum stocks when value or growth investing fails to generate the desired profits.
This approach primarily tends to follow the adage, "the trend is your friend." At its core, momentum investing is "buying high and selling higher." It is based on the idea that once a stock establishes a trend, it is more likely to continue in that direction because of the momentum that is already behind it. But before we delve deep into it, let us try to fathom why the momentum strategy at all works?
There are several behavioral biases that most investors exhibit in their decision-making. And these emotional responses, or rather mistakes, are the very reason that makes momentum strategy work.
For example, some investors 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 errors in judgment.
Furthermore, investors initially tend to underreact to news, events or data releases. However, once things become clear, they have a habit of going with the flow and overreacting, causing dramatic price reactions. These behavioral problems extend trends, thus opening up huge opportunities for momentum players.
To sum up, momentum investing is a way to profit from the general human tendency to extrapolate current trends into the future. It is based on that gap in time before the mean reversion occurs, i.e., before prices become rational again.
In this context, stocks like Target Hospitality Corp., BancFirst Corp. and Avis Budget Group, Inc. are worth betting on.
Momentum strategies have been known to be alpha-generative over a long period and across market stages. So, this strategy is quite tricky to implement, as detecting these trends is no child's play.
Here, we have created a strategy to help investors get in on these fast movers and rake in handsome gains. Our screen will help you benefit from both long-term price momentum and a short-term pullback in price.
Here are the three of the six stocks that made it through this screen:
Headquartered in The Woodlands, TX, Target Hospitality operates as a specialty rental and hospitality services company in North America. It offers a full suite of value-added solutions, including premium food service management, concierge, laundry, logistics, security and recreational facilities services. Target Hospitality has gained 212.1% in the past year but declined 2.3% in the past week. It has a Momentum Score of B.
Headquartered in Oklahoma City, OK, BancFirst Corp. provides a range of commercial banking services to retail customers and small to medium-sized businesses. It operates through 108 banking locations in Oklahoma and three in Dallas, TX. The stock has rallied 80.1% in the past year but gained a mere 7.4% in the past week. It has a Momentum Score of A.
Headquartered in Parsippany, NJ, Avis Budget Group is a leading vehicle rental operator in North America, Europe and Australasia, with an average rental fleet of nearly 650,000 vehicles. The company is a leading global provider of mobility solutions through its three most recognized brands — Avis, Budget and Zipcar. The company has licensees in approximately 175 countries throughout the world. The stock has appreciated 72.5% in the past year but declined 4.8% in the past week. It has a Momentum Score of A.
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 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.
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For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1977938/3-momentum-anomaly-picks-as-markets-shrug-off-rate-hike-fears
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Contact: Jim Giaquinto
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Avis Budget Group, Inc. (CAR) : Free Stock Analysis Report
BancFirst Corporation (BANF) : Free Stock Analysis Report
Target Hospitality Corp. (TH) : Free Stock Analysis Report
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