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Bet on These 5 Attractive Relative Price Strength Plays
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Wall Street has experienced an impressive rally over the past 18 months. Recently, weaker-than-expected inflation data, several soft key economic indicators and dovish comments from the Fed Chairman about a potential interest rate cut have heightened market expectations of a 25-basis point rate cut in September.
Investors are also anticipating at least two rate cuts by the end of 2024. Moreover, despite some disappointing results from major tech stocks, the overall earnings season has begun strongly.
This optimistic outlook makes relative price strength a compelling tool for investment, leveraging market momentum and economic resilience to drive potential gains.
Relative Price Strength Strategy
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 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 12 stocks that made it through the screen:
Seagate Technology Holdings plc (STX - Free Report) : Based in Dublin, Ireland, the company is a leading provider of data storage technology and infrastructure solutions. Over the past 60 days, the Zacks Consensus Estimate for fiscal 2025 earnings has moved up 2.6%. STX has a VGM Score of B.
Notably, the Zacks Consensus Estimate for Seagate Technology’s fiscal 2025 earnings per share indicates 352.7% year-over-year growth. The firm has a market capitalization of $22.1 billion. STX shares have gone up 89% in a year.
Reinsurance Group of America (RGA - Free Report) : The company is a leading global provider of traditional life and health reinsurance and financial solutions. The Zacks Consensus Estimate for 2024 earnings of Reinsurance Group of America indicates 6.2% growth. Headquartered in Chesterfield, MO, RGA has a VGM Score of A.
The firm has a market capitalization of $14.6 billion. Reinsurance Group of America beat the Zacks Consensus Estimate for earnings in each of the last four quarters and has a trailing four-quarter earnings surprise of roughly 19.5%, on average. RGA shares have surged 53.8% in a year.
HCA Healthcare, Inc. (HCA - Free Report) : HCA Healthcare is the largest non-governmental operator of acute care hospitals in the United States. The 2024 Zacks Consensus Estimate for this Nashville, TN-based firm indicates 10.3% year-over-year earnings per share growth. HCA has a VGM Score of A.
HCA Healthcare beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 8.2%, on average. HCA shares have gone up 21.9% in a year.
International Paper Company (IP - Free Report) : Based in Memphis, TN, the company is a global producer of renewable fiber-based products. IP’s current market capitalization is $16 billion. The company has a VGM Score of B.
Notably, over the past 60 days, the Zacks Consensus Estimate for International Paper Company’s 2024 earnings has moved up 4.7%. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 10.9%. IP shares have gone up 37% in a year.
OneSpaWorld Holdings Limited (OSW - Free Report) : Based in Nassau, Bahamas, the company specializes in the outsourced maritime health and wellness market. It has a trailing four-quarter earnings surprise of roughly 4.7%, on average.OSW has a VGM Score of A.
Notably, the Zacks Consensus Estimate for OneSpaWorld Holdings’ 2024 earnings per share indicates 30.2% year-over-year growth. The firm has a market capitalization of $1.7 billion. OSW shares have gained 40.8% 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
Bet on These 5 Attractive Relative Price Strength Plays
Wall Street has experienced an impressive rally over the past 18 months. Recently, weaker-than-expected inflation data, several soft key economic indicators and dovish comments from the Fed Chairman about a potential interest rate cut have heightened market expectations of a 25-basis point rate cut in September.
Investors are also anticipating at least two rate cuts by the end of 2024. Moreover, despite some disappointing results from major tech stocks, the overall earnings season has begun strongly.
This optimistic outlook makes relative price strength a compelling tool for investment, leveraging market momentum and economic resilience to drive potential gains.
Relative Price Strength Strategy
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 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 12 stocks that made it through the screen:
Seagate Technology Holdings plc (STX - Free Report) : Based in Dublin, Ireland, the company is a leading provider of data storage technology and infrastructure solutions. Over the past 60 days, the Zacks Consensus Estimate for fiscal 2025 earnings has moved up 2.6%. STX has a VGM Score of B.
Notably, the Zacks Consensus Estimate for Seagate Technology’s fiscal 2025 earnings per share indicates 352.7% year-over-year growth. The firm has a market capitalization of $22.1 billion. STX shares have gone up 89% in a year.
Reinsurance Group of America (RGA - Free Report) : The company is a leading global provider of traditional life and health reinsurance and financial solutions. The Zacks Consensus Estimate for 2024 earnings of Reinsurance Group of America indicates 6.2% growth. Headquartered in Chesterfield, MO, RGA has a VGM Score of A.
The firm has a market capitalization of $14.6 billion. Reinsurance Group of America beat the Zacks Consensus Estimate for earnings in each of the last four quarters and has a trailing four-quarter earnings surprise of roughly 19.5%, on average. RGA shares have surged 53.8% in a year.
HCA Healthcare, Inc. (HCA - Free Report) : HCA Healthcare is the largest non-governmental operator of acute care hospitals in the United States. The 2024 Zacks Consensus Estimate for this Nashville, TN-based firm indicates 10.3% year-over-year earnings per share growth. HCA has a VGM Score of A.
HCA Healthcare beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of roughly 8.2%, on average. HCA shares have gone up 21.9% in a year.
International Paper Company (IP - Free Report) : Based in Memphis, TN, the company is a global producer of renewable fiber-based products. IP’s current market capitalization is $16 billion. The company has a VGM Score of B.
Notably, over the past 60 days, the Zacks Consensus Estimate for International Paper Company’s 2024 earnings has moved up 4.7%. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 10.9%. IP shares have gone up 37% in a year.
OneSpaWorld Holdings Limited (OSW - Free Report) : Based in Nassau, Bahamas, the company specializes in the outsourced maritime health and wellness market. It has a trailing four-quarter earnings surprise of roughly 4.7%, on average.OSW has a VGM Score of A.
Notably, the Zacks Consensus Estimate for OneSpaWorld Holdings’ 2024 earnings per share indicates 30.2% year-over-year growth. The firm has a market capitalization of $1.7 billion. OSW shares have gained 40.8% 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.