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The U.S. stock market has experienced a remarkable 21-month rally, with no signs of slowing down. Despite September historically being a weak month for Wall Street, major indexes have stayed in the green, suggesting strong momentum. With the Fed's recent 50 basis point rate cut — the first since March 2020 — investors are positioned to benefit from a more favorable borrowing environment, bolstering market confidence.
In this low-interest-rate climate, "relative price strength" has emerged as a smart investment strategy. Stocks showing resilience and outperforming peers provide a solid opportunity amidst market uncertainties, such as weak economic data or geopolitical tensions. This approach may offer a balanced path forward for investors.
At this stage, investors would be wise to consider stocks like IAMGOLD Corporation (IAG - Free Report) , Alaska Air Group (ALK - Free Report) , Norwegian Cruise Line Holdings (NCLH - Free Report) and Barrick Gold Corporation (GOLD - Free Report) based on their relative price strength.
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 the four stocks that made it through the screen:
IAMGOLD Corporation: The company is a gold producer with mines located in Burkina Faso and Canada. The Zacks Consensus Estimate for 2024 earnings of IAMGOLD indicates 433.3% growth. Headquartered in Canada, IAG has a VGM Score of A.
The firm has a market capitalization of $3.1 billion. Over the past 60 days, the Zacks Consensus Estimate for IAMGOLD’s 2024 earnings has moved up 45.5%. IAG shares have surged 160.4% in a year.
Alaska Air Group: It provides passenger and cargo air transportation services. The 2024 Zacks Consensus Estimate for Seattle, WA-based ALK indicates 3.8% year-over-year earnings per share growth. Alaska Air Group has a VGM Score of B.
Over the past 60 days, ALK saw the Zacks Consensus Estimate for 2024 move up 13.8%. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 21.9%. Alaska Air Group shares have moved up 20.7% in a year.
Norwegian Cruise Line Holdings: Based in Miami, FL, the company is a leading cruise line operator offering its services to destinations worldwide. NCLH’s expected EPS growth rate for three to five years is currently 50.6%, which compares favorably with the industry's growth rate of 20.6%. The company has a VGM Score of A.
Notably, over the past 60 days, the Zacks Consensus Estimate for Norwegian Cruise Line’s 2024 earnings has moved up 12.1%. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 5.7%. NCLH shares have gone up 24.4% in a year.
Barrick Gold Corporation: Based in Toronto, Canada, the company is one of the largest gold mining companies in the world. GOLD’s current market capitalization is $36.3 billion. The company has a VGM Score of B.
Notably, over the past 60 days, the Zacks Consensus Estimate for Barrick Gold’s 2024 earnings has moved up 9.5%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 21.2%. GOLD shares have jumped 44.3% in a year.
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
4 Relative Price Strength Stocks Presenting Ideal Buying Opportunity
The U.S. stock market has experienced a remarkable 21-month rally, with no signs of slowing down. Despite September historically being a weak month for Wall Street, major indexes have stayed in the green, suggesting strong momentum. With the Fed's recent 50 basis point rate cut — the first since March 2020 — investors are positioned to benefit from a more favorable borrowing environment, bolstering market confidence.
In this low-interest-rate climate, "relative price strength" has emerged as a smart investment strategy. Stocks showing resilience and outperforming peers provide a solid opportunity amidst market uncertainties, such as weak economic data or geopolitical tensions. This approach may offer a balanced path forward for investors.
At this stage, investors would be wise to consider stocks like IAMGOLD Corporation (IAG - Free Report) , Alaska Air Group (ALK - Free Report) , Norwegian Cruise Line Holdings (NCLH - Free Report) and Barrick Gold Corporation (GOLD - Free Report) based on their relative price strength.
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 the four stocks that made it through the screen:
IAMGOLD Corporation: The company is a gold producer with mines located in Burkina Faso and Canada. The Zacks Consensus Estimate for 2024 earnings of IAMGOLD indicates 433.3% growth. Headquartered in Canada, IAG has a VGM Score of A.
The firm has a market capitalization of $3.1 billion. Over the past 60 days, the Zacks Consensus Estimate for IAMGOLD’s 2024 earnings has moved up 45.5%. IAG shares have surged 160.4% in a year.
Alaska Air Group: It provides passenger and cargo air transportation services. The 2024 Zacks Consensus Estimate for Seattle, WA-based ALK indicates 3.8% year-over-year earnings per share growth. Alaska Air Group has a VGM Score of B.
Over the past 60 days, ALK saw the Zacks Consensus Estimate for 2024 move up 13.8%. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 21.9%. Alaska Air Group shares have moved up 20.7% in a year.
Norwegian Cruise Line Holdings: Based in Miami, FL, the company is a leading cruise line operator offering its services to destinations worldwide. NCLH’s expected EPS growth rate for three to five years is currently 50.6%, which compares favorably with the industry's growth rate of 20.6%. The company has a VGM Score of A.
Notably, over the past 60 days, the Zacks Consensus Estimate for Norwegian Cruise Line’s 2024 earnings has moved up 12.1%. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 5.7%. NCLH shares have gone up 24.4% in a year.
Barrick Gold Corporation: Based in Toronto, Canada, the company is one of the largest gold mining companies in the world. GOLD’s current market capitalization is $36.3 billion. The company has a VGM Score of B.
Notably, over the past 60 days, the Zacks Consensus Estimate for Barrick Gold’s 2024 earnings has moved up 9.5%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 21.2%. GOLD shares have jumped 44.3% in a year.
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.