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3 Top Breakout Stocks to Buy for Remarkable Returns
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The active investing approach generally focuses on picking breakout stocks. Or in other words, it seeks to identify those stocks whose prices vary within a specific band. In case a stock falls below the lower bound of this band, it may be time to offload it from your portfolio. However, a stock breaking above this channel promises to deliver strong gains.
Zeroing in on Breakout Stocks
In order to select the right breakout stock, one has to first calculate its support and resistance level. A support level is the lower bound for stock movements while a resistance level refers to the maximum price it trades within a considerable period.
In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, meaning they would like to add them to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.
Has a Breakout Occurred?
The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.
For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the trading channel that has been established is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive.
Screening Parameters
• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases, but whose gains are not excessive.)
• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.)
• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy rated stocks can get through.)
(Stocks that move by a greater degree than the broader market but within a reasonable limit.)
Current price less than or equal to $20 (Stocks which are reasonably priced.)
These criteria narrow down the universe of more than 7,706 stocks to only 19.
Here are three of the 19 stocks that passed the screen:
ProPhase Labs (PRPH - Free Report) , formerly known as The Quigley Corporation, is a manufacturer, marketer and distributor of a diversified range of homeopathic and health products offered to the general public.
Currently, ProPhase Labs carries a Zacks Rank #2. PRPH has an expected earnings growth rate of 35% for the current year.
Hudson Technologies (HDSN - Free Report) is a leading provider of innovative solutions to recurring problems within the refrigeration industry.
Hudson Technologies currently has a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 13%.
YPF Sociedad Anonima (YPF - Free Report) is an international energy company based on the integrated business of hydrocarbons, focalized in Latin America, with high standards of efficiency, profitability and responsibility.
Currently, YPF Sociedad Anonima carries a Zacks Rank #1. YPF has an expected earnings growth rate of 1,590% for the current 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 backtest 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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3 Top Breakout Stocks to Buy for Remarkable Returns
The active investing approach generally focuses on picking breakout stocks. Or in other words, it seeks to identify those stocks whose prices vary within a specific band. In case a stock falls below the lower bound of this band, it may be time to offload it from your portfolio. However, a stock breaking above this channel promises to deliver strong gains.
Zeroing in on Breakout Stocks
In order to select the right breakout stock, one has to first calculate its support and resistance level. A support level is the lower bound for stock movements while a resistance level refers to the maximum price it trades within a considerable period.
In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, meaning they would like to add them to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.
Has a Breakout Occurred?
The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.
For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the trading channel that has been established is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive.
Screening Parameters
• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases, but whose gains are not excessive.)
• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.)
• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy rated stocks can get through.)
Whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
• Beta for 60 months less than or equal to 2
(Stocks that move by a greater degree than the broader market but within a reasonable limit.)
Current price less than or equal to $20 (Stocks which are reasonably priced.)
These criteria narrow down the universe of more than 7,706 stocks to only 19.
Here are three of the 19 stocks that passed the screen:
ProPhase Labs (PRPH - Free Report) , formerly known as The Quigley Corporation, is a manufacturer, marketer and distributor of a diversified range of homeopathic and health products offered to the general public.
Currently, ProPhase Labs carries a Zacks Rank #2. PRPH has an expected earnings growth rate of 35% for the current year.
Hudson Technologies (HDSN - Free Report) is a leading provider of innovative solutions to recurring problems within the refrigeration industry.
Hudson Technologies currently has a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 13%.
YPF Sociedad Anonima (YPF - Free Report) is an international energy company based on the integrated business of hydrocarbons, focalized in Latin America, with high standards of efficiency, profitability and responsibility.
Currently, YPF Sociedad Anonima carries a Zacks Rank #1. YPF has an expected earnings growth rate of 1,590% for the current 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 backtest 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.