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5 Relative Price Strength Stocks to Manage Market Volatility
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Recent market sell-offs have been driven by a confluence of factors, contributing to the ongoing pullback and correction in major indexes. Investors are grappling with concerns over an economic slowdown and recession spurred by disappointing economic indicators.
The recent weak jobs data for July, along with lower-than-expected job additions and a rise in the unemployment rate, have cast a shadow over the U.S. economy's prospects. This has intensified fears about the Federal Reserve's ability to achieve a "soft landing" and has raised concerns that the central bank may be lagging in its response to economic challenges.
In addition to domestic economic worries, geopolitical tensions are playing a significant role in the market rout. The unresolved conflict between Ukraine and Russia continues to weigh on global sentiment while escalating tensions between Israel and Iran add to the uncertainty. Furthermore, political instability in Bangladesh has flared up volatility.
As markets continue to struggle with this uncertainty, investors are reassessing their positions and strategies. In such a tumultuous period, using a "relative price strength" strategy can be advantageous. This approach involves identifying stocks that are outperforming their peers despite the broader market weakness, helping investors find opportunities amid the volatility.
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 19 stocks that made it through the screen:
Spotify Technology S.A. (SPOT - Free Report) : Based in Luxembourg City, the company is an audio streaming service platform. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 27.5%. SPOT has a VGM Score of B.
Notably, the Zacks Consensus Estimate for Spotify’s 2024 earnings per share indicates 314.2% year-over-year growth. The firm has a market capitalization of $64.4 billion. SPOT shares have surged 143.2% in a year.
Interface, Inc. (TILE - Free Report) : The company is a specialized operator in carpet tile and flooring. The Zacks Consensus Estimate for 2024 earnings of Interface indicates 28% growth. Headquartered in Atlanta, GA, TILE has a VGM Score of A.
The firm has a market capitalization of $946.5 million. Interface beat the Zacks Consensus Estimate for earnings in each of the last four quarters and has a trailing four-quarter earnings surprise of roughly 65%, on average. TILE shares have gained 58.8% in a year.
Tenet Healthcare Corporation (THC - Free Report) : Based in Dallas, TX, the company offers healthcare services through its general hospitals and related facilities. THC’s expected EPS growth rate for three to five years is currently 18.3%, which compares favorably with the industry's growth rate of 14.7%. The company has a VGM Score of A.
Notably, over the past 60 days, the Zacks Consensus Estimate for Tenet Healthcare’s 2024 earnings has moved up 16.6%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 58.5%. THC shares have gone up 105.1% in a year.
Dorman Products (DORM - Free Report) : Dorman Products is a provider and supplier of motor vehicle aftermarket parts. The 2024 Zacks Consensus Estimate for this Colmar, PA-based firm indicates 35.5% year-over-year earnings per share growth. DORM has a VGM Score of B.
Dorman Products 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 24.7%, on average. DORM shares have increased 21.1% in a year.
Matson, Inc. (MATX - Free Report) : Based in Honolulu, HI, the company is a leading shipping and logistics firm. MATX’s current market capitalization is $4.3 billion. The company has a VGM Score of A.
Notably, over the past 60 days, the Zacks Consensus Estimate for Matson’s 2024 earnings has moved up 18.5%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 4.1%. MATX shares have gone up 37.4% 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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5 Relative Price Strength Stocks to Manage Market Volatility
Recent market sell-offs have been driven by a confluence of factors, contributing to the ongoing pullback and correction in major indexes. Investors are grappling with concerns over an economic slowdown and recession spurred by disappointing economic indicators.
The recent weak jobs data for July, along with lower-than-expected job additions and a rise in the unemployment rate, have cast a shadow over the U.S. economy's prospects. This has intensified fears about the Federal Reserve's ability to achieve a "soft landing" and has raised concerns that the central bank may be lagging in its response to economic challenges.
In addition to domestic economic worries, geopolitical tensions are playing a significant role in the market rout. The unresolved conflict between Ukraine and Russia continues to weigh on global sentiment while escalating tensions between Israel and Iran add to the uncertainty. Furthermore, political instability in Bangladesh has flared up volatility.
As markets continue to struggle with this uncertainty, investors are reassessing their positions and strategies. In such a tumultuous period, using a "relative price strength" strategy can be advantageous. This approach involves identifying stocks that are outperforming their peers despite the broader market weakness, helping investors find opportunities amid the volatility.
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 19 stocks that made it through the screen:
Spotify Technology S.A. (SPOT - Free Report) : Based in Luxembourg City, the company is an audio streaming service platform. Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 27.5%. SPOT has a VGM Score of B.
Notably, the Zacks Consensus Estimate for Spotify’s 2024 earnings per share indicates 314.2% year-over-year growth. The firm has a market capitalization of $64.4 billion. SPOT shares have surged 143.2% in a year.
Interface, Inc. (TILE - Free Report) : The company is a specialized operator in carpet tile and flooring. The Zacks Consensus Estimate for 2024 earnings of Interface indicates 28% growth. Headquartered in Atlanta, GA, TILE has a VGM Score of A.
The firm has a market capitalization of $946.5 million. Interface beat the Zacks Consensus Estimate for earnings in each of the last four quarters and has a trailing four-quarter earnings surprise of roughly 65%, on average. TILE shares have gained 58.8% in a year.
Tenet Healthcare Corporation (THC - Free Report) : Based in Dallas, TX, the company offers healthcare services through its general hospitals and related facilities. THC’s expected EPS growth rate for three to five years is currently 18.3%, which compares favorably with the industry's growth rate of 14.7%. The company has a VGM Score of A.
Notably, over the past 60 days, the Zacks Consensus Estimate for Tenet Healthcare’s 2024 earnings has moved up 16.6%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 58.5%. THC shares have gone up 105.1% in a year.
Dorman Products (DORM - Free Report) : Dorman Products is a provider and supplier of motor vehicle aftermarket parts. The 2024 Zacks Consensus Estimate for this Colmar, PA-based firm indicates 35.5% year-over-year earnings per share growth. DORM has a VGM Score of B.
Dorman Products 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 24.7%, on average. DORM shares have increased 21.1% in a year.
Matson, Inc. (MATX - Free Report) : Based in Honolulu, HI, the company is a leading shipping and logistics firm. MATX’s current market capitalization is $4.3 billion. The company has a VGM Score of A.
Notably, over the past 60 days, the Zacks Consensus Estimate for Matson’s 2024 earnings has moved up 18.5%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 4.1%. MATX shares have gone up 37.4% 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.