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Time to Buy These 5 Relative Price Strength Stocks
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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 for 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 24 stocks that made it through the screen:
Avis Budget Group, Inc. (CAR - Free Report) : Founded in 1946 and headquartered in Parsippany, NJ, Avis Budget Group operates as a leading vehicle rental operator in North America, Europe and Australasia. Avis Budget Group has a VGM Score of B.
Notably, Avis Budget Group has an excellent earnings surprise history. CAR surpassed estimates in each of the last four quarters, delivering an earnings surprise of 76.9%, on average. The company’s shares have rocketed around 732.2% in a year.
Builders FirstSource, Inc. (BLDR - Free Report) : The company is a manufacturer and supplier of structural and associated building products primarily for new residential construction in the U.S. Builders FirstSource has a VGM Score of B. Over the past 30 days, Dallas, TX-based BLDR saw the Zacks Consensus Estimate for 2021 move up 31.1%.
Builders FirstSource has a projected earnings growth rate of 173.1% for the current year. The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 71.5%. BLDR has rallied around 97.5% in a year.
Kronos Worldwide, Inc. (KRO - Free Report) : Kronos Worldwide is a leading producer and marketer of TiO2, a white pigment for providing whiteness, brightness and opacity that is used in a broad range of products. The 2021 Zacks Consensus Estimate for this Dallas, TX-based firm indicates 76.4% earnings per share growth over 2020. KRO has a VGM Score of A.
Kronos Worldwide beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed twice. It has a trailing four-quarter earnings surprise of roughly 29%, on average. KRO shares have gained around 11.1% in a year.
Carriage Services, Inc. (CSV - Free Report) : Carriage Services is a leading provider of funeral and cemetery services in the United States. Carrying a VGM Score of B, Houston, TX-based Carriage Services’ expected EPS growth rate for three to five years is currently 15%, which compares favorably with the industry's growth rate of 11.4%.
Carriage Services has a projected earnings growth rate of 64% for the current year. The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 28%. CSV shares have gained around 88.3% in a year.
PDC Energy, Inc. : This Denver, CO-based firm is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. PDC Energy has a VGM Score of B.
PDC Energy has a projected earnings growth rate of 273.4% for the current year. The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 51.1%. PDCE shares have gained around 210.1% in a year.
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.
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.
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Time to Buy These 5 Relative Price Strength Stocks
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 for 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 24 stocks that made it through the screen:
Avis Budget Group, Inc. (CAR - Free Report) : Founded in 1946 and headquartered in Parsippany, NJ, Avis Budget Group operates as a leading vehicle rental operator in North America, Europe and Australasia. Avis Budget Group has a VGM Score of B.
Notably, Avis Budget Group has an excellent earnings surprise history. CAR surpassed estimates in each of the last four quarters, delivering an earnings surprise of 76.9%, on average. The company’s shares have rocketed around 732.2% in a year.
Builders FirstSource, Inc. (BLDR - Free Report) : The company is a manufacturer and supplier of structural and associated building products primarily for new residential construction in the U.S. Builders FirstSource has a VGM Score of B. Over the past 30 days, Dallas, TX-based BLDR saw the Zacks Consensus Estimate for 2021 move up 31.1%.
Builders FirstSource has a projected earnings growth rate of 173.1% for the current year. The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 71.5%. BLDR has rallied around 97.5% in a year.
Kronos Worldwide, Inc. (KRO - Free Report) : Kronos Worldwide is a leading producer and marketer of TiO2, a white pigment for providing whiteness, brightness and opacity that is used in a broad range of products. The 2021 Zacks Consensus Estimate for this Dallas, TX-based firm indicates 76.4% earnings per share growth over 2020. KRO has a VGM Score of A.
Kronos Worldwide beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed twice. It has a trailing four-quarter earnings surprise of roughly 29%, on average. KRO shares have gained around 11.1% in a year.
Carriage Services, Inc. (CSV - Free Report) : Carriage Services is a leading provider of funeral and cemetery services in the United States. Carrying a VGM Score of B, Houston, TX-based Carriage Services’ expected EPS growth rate for three to five years is currently 15%, which compares favorably with the industry's growth rate of 11.4%.
Carriage Services has a projected earnings growth rate of 64% for the current year. The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 28%. CSV shares have gained around 88.3% in a year.
PDC Energy, Inc. : This Denver, CO-based firm is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. PDC Energy has a VGM Score of B.
PDC Energy has a projected earnings growth rate of 273.4% for the current year. The company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 51.1%. PDCE shares have gained around 210.1% in a year.
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.