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By targeting stocks breaking out to or near new highs, investors can insert themselves in favorable trends where buyers are in control.
And as many have learned, stocks breaking out to new highs tend to make even higher highs, especially when they boast favorable near-term earnings outlooks.
Three large-cap stocks – Discover Financial Services (DFS - Free Report) , Builders FirstSource (BLDR - Free Report) , and Jabil (JBL - Free Report) – are all breaking out to or near 52-week highs and sport a favorable Zacks Rank.
In addition, all three carry sound valuation levels, with all carrying a Style Score of "A" for Value. For value-conscious investors interested in momentum, let’s take a closer look at each.
Discover Financial Services
Discover Financial Services is a digital banking and payment services company in the United States, offering deposit products, credit cards, and personal, student, and home loans. The stock is a Zack Rank #2 (Buy), with the revisions trend particularly notable for its upcoming quarterly release on July 19th.
Image Source: Zacks Investment Research
DFS shares presently trade at an 8.8X forward earnings multiple, in line with the five-year median and nicely beneath 2022 highs of 9.6X. The stock carries a Style Score of “A” for Value.
Image Source: Zacks Investment Research
Further, DFS shares could also attract income-focused investors, with the company’s dividend yielding a solid 2.4% annually. Dividend growth is also apparent, with the payout growing by a double-digit 11% over the last five years.
Builders FirstSource
Builders FirstSource, a current Zacks Rank #1 (Strong Buy), supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers. Analysts have raised their expectations across the board and have been in full agreement.
Image Source: Zacks Investment Research
The company has consistently surprised in a big way as of late, exceeding the Zacks Consensus EPS estimate by an average of an impressive 70% over its last four quarters. Market participants have been impressed with the results, with shares seeing bullish activity post-earnings in back-to-back releases.
Image Source: Zacks Investment Research
Jabil
Jabil provides electronic manufacturing services and solutions to its customers, currently boasting a Zacks Rank #2 (Buy). The revisions trend for its current fiscal year is hard to ignore, with the $8.50 EPS estimate being revised nearly 8% higher since July of last year.
Image Source: Zacks Investment Research
JBL shares currently trade at a 13.1X forward earnings multiple, above the five-year median by a few ticks but nicely below the Zacks Computer and Technology sector average. The company also boasts a solid growth profile, with earnings forecasted to climb 11% in its current fiscal year (FY23) and a further 9% in FY24.
Further, Jabil’s 45.2% trailing twelve-month return on equity (ROE) is certainly worth highlighting, reflecting a higher level of efficiency in generating profits from existing assets.
Image Source: Zacks Investment Research
Bottom Line
Momentum investing is centered around targeting stocks displaying outperformance. And when you add in the Zacks Rank, the strategy can become even more powerful.
And that’s precisely what all three stocks above – Discover Financial Services (DFS - Free Report) , Builders FirstSource (BLDR - Free Report) , and Jabil (JBL - Free Report) – have displayed, breaking out to new 52-week highs on the back of improved earnings outlooks.
In addition, all three sport a Style Score of “A” for Value.
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3 Red-Hot Stocks Suited for Momentum Investors
By targeting stocks breaking out to or near new highs, investors can insert themselves in favorable trends where buyers are in control.
And as many have learned, stocks breaking out to new highs tend to make even higher highs, especially when they boast favorable near-term earnings outlooks.
Three large-cap stocks – Discover Financial Services (DFS - Free Report) , Builders FirstSource (BLDR - Free Report) , and Jabil (JBL - Free Report) – are all breaking out to or near 52-week highs and sport a favorable Zacks Rank.
In addition, all three carry sound valuation levels, with all carrying a Style Score of "A" for Value. For value-conscious investors interested in momentum, let’s take a closer look at each.
Discover Financial Services
Discover Financial Services is a digital banking and payment services company in the United States, offering deposit products, credit cards, and personal, student, and home loans. The stock is a Zack Rank #2 (Buy), with the revisions trend particularly notable for its upcoming quarterly release on July 19th.
Image Source: Zacks Investment Research
DFS shares presently trade at an 8.8X forward earnings multiple, in line with the five-year median and nicely beneath 2022 highs of 9.6X. The stock carries a Style Score of “A” for Value.
Image Source: Zacks Investment Research
Further, DFS shares could also attract income-focused investors, with the company’s dividend yielding a solid 2.4% annually. Dividend growth is also apparent, with the payout growing by a double-digit 11% over the last five years.
Builders FirstSource
Builders FirstSource, a current Zacks Rank #1 (Strong Buy), supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers. Analysts have raised their expectations across the board and have been in full agreement.
Image Source: Zacks Investment Research
The company has consistently surprised in a big way as of late, exceeding the Zacks Consensus EPS estimate by an average of an impressive 70% over its last four quarters. Market participants have been impressed with the results, with shares seeing bullish activity post-earnings in back-to-back releases.
Image Source: Zacks Investment Research
Jabil
Jabil provides electronic manufacturing services and solutions to its customers, currently boasting a Zacks Rank #2 (Buy). The revisions trend for its current fiscal year is hard to ignore, with the $8.50 EPS estimate being revised nearly 8% higher since July of last year.
Image Source: Zacks Investment Research
JBL shares currently trade at a 13.1X forward earnings multiple, above the five-year median by a few ticks but nicely below the Zacks Computer and Technology sector average. The company also boasts a solid growth profile, with earnings forecasted to climb 11% in its current fiscal year (FY23) and a further 9% in FY24.
Further, Jabil’s 45.2% trailing twelve-month return on equity (ROE) is certainly worth highlighting, reflecting a higher level of efficiency in generating profits from existing assets.
Image Source: Zacks Investment Research
Bottom Line
Momentum investing is centered around targeting stocks displaying outperformance. And when you add in the Zacks Rank, the strategy can become even more powerful.
And that’s precisely what all three stocks above – Discover Financial Services (DFS - Free Report) , Builders FirstSource (BLDR - Free Report) , and Jabil (JBL - Free Report) – have displayed, breaking out to new 52-week highs on the back of improved earnings outlooks.
In addition, all three sport a Style Score of “A” for Value.