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Put These 5 Relative Price Strength Stocks on Your Radar
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While all the focus has been on the banking industry over the last few days, the latest consumer price index data has once again turned the spotlight on inflation.
On Mar 10, the Federal Deposit Insurance Corp. (FDIC) announced that regulators closed Silicon Valley Bank (SVB) and took control of its deposits. This was the biggest bank failure in the United States since the collapse of Washington Mutual in 2008 and the second-biggest bank failure in the nation’s history. Market participants are highly concerned that the SVB crisis will significantly dent confidence of investors in the United States.
Meanwhile, the February CPI print might have soothed some nerves. The big numbers on monthly CPI reports are of the year-over-year variety: headline CPI over the past year (or the inflation rate), which came in at +6.0%, just as expected, and 40 bps lower than January. This is good news for the economy as a whole, and demonstrates the Fed’s effectiveness in fighting inflation with interest rate hikes.
With the influx of good and bad news, markets today lack clarity on the broader economic picture. Therefore, volatile trading in U.S. stocks is expected to continue for some time.
In the current jittery market environment, investors who might want to stay exposed to the equity setup should 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
Investors generally gauge a stock’s potential returns by examining earnings growth and valuation multiples. At the same time, it’s essential to measure the performance of such a stock relative to its industry or peers, or an appropriate benchmark.
If you see that a stock is underperforming on fundamental factors, it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance of providing considerable returns.
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 nine stocks that made it through the screen:
Lantheus Holdings, Inc. : It is focused on developing and commercializing diagnostic and therapeutic products for heart, cancer, and other diseases. The 2023 Zacks Consensus Estimate for Bedford, MA-based LNTH indicates 13.5% year-over-year earnings per share growth. Lantheus has a VGM Score of B.
Over the past 30 days, Lantheus saw the Zacks Consensus Estimate for 2023 move up 12.7%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters. LNTH shares have increased 32.8% in a year.
Microchip Technology Incorporated (MCHP - Free Report) : Based in Chandler, AZ, the company develops and manufactures products for small, low-power computers designed to perform specific tasks. Microchip Technology’s expected EPS growth rate for three to five years is currently 16.9%, which compares favorably with the industry's growth rate of 16.4%. MCHP has a VGM Score of B.
Notably, Microchip Technology beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 3.1%, on average. MCHP shares have gone up 11.4% in a year.
Taylor Morrison Home Corporation (TMHC - Free Report) : Taylor Morrison is one of the nation's leading homebuilders and developers. Over the past 30 days, the Scottsdale, AZ-based company saw the Zacks Consensus Estimate for 2023 move up 31.3%. TMHC has a VGM Score of A.
Taylor Morrison beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 13.3%, on average. TMHC stock has gained 14.3% in a year.
Vipshop Holdings Limited (VIPS - Free Report) : The company is an online discount brand retailer in China. The 2023 Zacks Consensus Estimate for this Guangzhou-based firm indicates 4.5% year-over-year earnings per share growth. VIPS has a VGM Score of B.
Vipshop beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 22.9%, on average. VIPS shares have surged 77.7% in a year.
MYR Group Inc. (MYRG - Free Report) : It provides electrical infrastructure and commercial and industrial project solutions throughout North America. MYR Group has a VGM Score of A. Over the past 30 days, Thornton, CO-based MYRG saw the Zacks Consensus Estimate for 2023 move up 4.8%.
MYR Group beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 13.2%. Valued at around $2 billion, MYRG has gained 38.7% 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: Bigstock
Put These 5 Relative Price Strength Stocks on Your Radar
While all the focus has been on the banking industry over the last few days, the latest consumer price index data has once again turned the spotlight on inflation.
On Mar 10, the Federal Deposit Insurance Corp. (FDIC) announced that regulators closed Silicon Valley Bank (SVB) and took control of its deposits. This was the biggest bank failure in the United States since the collapse of Washington Mutual in 2008 and the second-biggest bank failure in the nation’s history. Market participants are highly concerned that the SVB crisis will significantly dent confidence of investors in the United States.
Meanwhile, the February CPI print might have soothed some nerves. The big numbers on monthly CPI reports are of the year-over-year variety: headline CPI over the past year (or the inflation rate), which came in at +6.0%, just as expected, and 40 bps lower than January. This is good news for the economy as a whole, and demonstrates the Fed’s effectiveness in fighting inflation with interest rate hikes.
With the influx of good and bad news, markets today lack clarity on the broader economic picture. Therefore, volatile trading in U.S. stocks is expected to continue for some time.
In the current jittery market environment, investors who might want to stay exposed to the equity setup should 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
Investors generally gauge a stock’s potential returns by examining earnings growth and valuation multiples. At the same time, it’s essential to measure the performance of such a stock relative to its industry or peers, or an appropriate benchmark.
If you see that a stock is underperforming on fundamental factors, it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance of providing considerable returns.
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 nine stocks that made it through the screen:
Lantheus Holdings, Inc. : It is focused on developing and commercializing diagnostic and therapeutic products for heart, cancer, and other diseases. The 2023 Zacks Consensus Estimate for Bedford, MA-based LNTH indicates 13.5% year-over-year earnings per share growth. Lantheus has a VGM Score of B.
Over the past 30 days, Lantheus saw the Zacks Consensus Estimate for 2023 move up 12.7%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters. LNTH shares have increased 32.8% in a year.
Microchip Technology Incorporated (MCHP - Free Report) : Based in Chandler, AZ, the company develops and manufactures products for small, low-power computers designed to perform specific tasks. Microchip Technology’s expected EPS growth rate for three to five years is currently 16.9%, which compares favorably with the industry's growth rate of 16.4%. MCHP has a VGM Score of B.
Notably, Microchip Technology beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 3.1%, on average. MCHP shares have gone up 11.4% in a year.
Taylor Morrison Home Corporation (TMHC - Free Report) : Taylor Morrison is one of the nation's leading homebuilders and developers. Over the past 30 days, the Scottsdale, AZ-based company saw the Zacks Consensus Estimate for 2023 move up 31.3%. TMHC has a VGM Score of A.
Taylor Morrison beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company has a trailing four-quarter earnings surprise of 13.3%, on average. TMHC stock has gained 14.3% in a year.
Vipshop Holdings Limited (VIPS - Free Report) : The company is an online discount brand retailer in China. The 2023 Zacks Consensus Estimate for this Guangzhou-based firm indicates 4.5% year-over-year earnings per share growth. VIPS has a VGM Score of B.
Vipshop beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 22.9%, on average. VIPS shares have surged 77.7% in a year.
MYR Group Inc. (MYRG - Free Report) : It provides electrical infrastructure and commercial and industrial project solutions throughout North America. MYR Group has a VGM Score of A. Over the past 30 days, Thornton, CO-based MYRG saw the Zacks Consensus Estimate for 2023 move up 4.8%.
MYR Group beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being 13.2%. Valued at around $2 billion, MYRG has gained 38.7% 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.