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5 Relative Price Strength Stocks Every Investor Should Buy
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While it's been a difficult first half of the calendar year, Wall Street witnessed a strong rally in July, recording its best month since November 2020. Economic data released over the past few weeks, in addition to strong corporate earnings, have reaffirmed the stability of the U.S. economy. Unsurprisingly, the S&P 500 Index is up more than 13% since the mid-June lows.
Agreed, the month of July rally snapped six months of a rigorous market meltdown, but market participants are still divided about whether the market has bottomed out or if it witnessed a bear market relief rally. Moreover, the housing market — one of the booming sectors during the pandemic — has been declining precipitously since April. In other words, there are still factors at play that could dampen the recent bullish mood.
In the current jittery market environment, for investors who might want to stay exposed to the equity setup, it is time to focus on good investment opportunities. One of the ways such potential plays could be identified is to look for signs of relative price strength.
Relative Price Strength Strategy
Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.
Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it.
However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures that you have a winning option on your hands.
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 crucial 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 14 stocks that made it through the screen:
Axcelis Technologies, Inc. (ACLS - Free Report) : The Beverly, MA-based firm is a leading provider of ion implant equipment to the semiconductor industry. Founded in 1978, Axcelis Technologies has a VGM Score of B.
For 2022, ACLS has a projected earnings growth rate of 53.5%. Valued at around $2.4 billion, Axcelis Technologies shares have gained around 72.4% in a year.
Hertz Global Holdings, Inc. (HTZ - Free Report) : It is one of the world’s leading vehicle rental companies. Hertz Global has a VGM Score of B. Over the past 30 days, Estero, FL-based HTZ saw the Zacks Consensus Estimate for 2022 move up 12.8%.
Hertz Global beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13.5%. Valued at around $7.7 billion, HTZ has gained some 30% in a year.
United Rentals, Inc. (URI - Free Report) : The Stamford, CT-based firm is the largest equipment rental company in the world. Founded in 1997, United Rentals has a VGM Score of A.
For 2022, URI has a projected earnings growth rate of 40.7%. Valued at around $22.2 billion, United Rentals shares have lost around 3.6% in a year.
Universal Logistics Holdings, Inc. (ULH - Free Report) : Universal Logistics Holdings is a provider of customized transportation and logistics solutions throughout North America and Colombia. The 2022 Zacks Consensus Estimate for this Warren, MI-based firm indicates 80.1% year-over-year earnings per share growth. ULH has a VGM Score of A.
Universal Logistics beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 73.7%, on average. ULH shares have gained around 66.7% in a year.
Clearwater Paper Corporation (CLW - Free Report) : Clearwater Paper operates in the tissue and paperboard industry. The 2022 Zacks Consensus Estimate for the Spokane, WA-based firm indicates 249.5% year-over-year earnings per share growth. CLW has a VGM Score of A.
Clearwater Paper beat the Zacks Consensus Estimate for earnings in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 28.8%, on average. CLW shares have gained around 33.6% 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.
Image: Shutterstock
5 Relative Price Strength Stocks Every Investor Should Buy
While it's been a difficult first half of the calendar year, Wall Street witnessed a strong rally in July, recording its best month since November 2020. Economic data released over the past few weeks, in addition to strong corporate earnings, have reaffirmed the stability of the U.S. economy. Unsurprisingly, the S&P 500 Index is up more than 13% since the mid-June lows.
Agreed, the month of July rally snapped six months of a rigorous market meltdown, but market participants are still divided about whether the market has bottomed out or if it witnessed a bear market relief rally. Moreover, the housing market — one of the booming sectors during the pandemic — has been declining precipitously since April. In other words, there are still factors at play that could dampen the recent bullish mood.
In the current jittery market environment, for investors who might want to stay exposed to the equity setup, it is time to focus on good investment opportunities. One of the ways such potential plays could be identified is to look for signs of relative price strength.
Relative Price Strength Strategy
Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.
Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it.
However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures that you have a winning option on your hands.
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 crucial 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 14 stocks that made it through the screen:
Axcelis Technologies, Inc. (ACLS - Free Report) : The Beverly, MA-based firm is a leading provider of ion implant equipment to the semiconductor industry. Founded in 1978, Axcelis Technologies has a VGM Score of B.
For 2022, ACLS has a projected earnings growth rate of 53.5%. Valued at around $2.4 billion, Axcelis Technologies shares have gained around 72.4% in a year.
Hertz Global Holdings, Inc. (HTZ - Free Report) : It is one of the world’s leading vehicle rental companies. Hertz Global has a VGM Score of B. Over the past 30 days, Estero, FL-based HTZ saw the Zacks Consensus Estimate for 2022 move up 12.8%.
Hertz Global beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 13.5%. Valued at around $7.7 billion, HTZ has gained some 30% in a year.
United Rentals, Inc. (URI - Free Report) : The Stamford, CT-based firm is the largest equipment rental company in the world. Founded in 1997, United Rentals has a VGM Score of A.
For 2022, URI has a projected earnings growth rate of 40.7%. Valued at around $22.2 billion, United Rentals shares have lost around 3.6% in a year.
Universal Logistics Holdings, Inc. (ULH - Free Report) : Universal Logistics Holdings is a provider of customized transportation and logistics solutions throughout North America and Colombia. The 2022 Zacks Consensus Estimate for this Warren, MI-based firm indicates 80.1% year-over-year earnings per share growth. ULH has a VGM Score of A.
Universal Logistics beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 73.7%, on average. ULH shares have gained around 66.7% in a year.
Clearwater Paper Corporation (CLW - Free Report) : Clearwater Paper operates in the tissue and paperboard industry. The 2022 Zacks Consensus Estimate for the Spokane, WA-based firm indicates 249.5% year-over-year earnings per share growth. CLW has a VGM Score of A.
Clearwater Paper beat the Zacks Consensus Estimate for earnings in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 28.8%, on average. CLW shares have gained around 33.6% 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.