Yahoo Finance 5 Stocks With Recent Price Strength to Tap May's Rally
The 15-month bull run of U.S. stock markets suffered a surprise setback in April. We believe that April’s meltdown was nothing but a bull market correction, and this time a welcome one, as Wall Street has rebounded in May.
The Department of Labor reported that the U.S. economy added 175,000 jobs in April, missing the consensus estimate of 200,000. Job additions in March were revised upward by 12,000 while those in February were revised downward by 34,000. The unemployment rate increased to 3.9% in April, compared with the consensus estimate and March’s data of 3.8%. April marked the highest level since January 2022.
Month over month, the average hourly earnings rate dropped to 0.2% in April, compared with the consensus estimate and March’s data of 0.3%. Year over year, the wage rate increased 3.9% in April but came in below the consensus estimate of 4%.
The Department of Commerce reported that U.S. GDP grew at a 1.6% annualized rate in first-quarter 2024, well below the consensus estimate of 2.5%. Moreover, the Institute of Supply Management (ISM) reported that both manufacturing and services PMIs (purchasing managers’ index) contracted in April.
The manufacturing PMI of April came in at 49.2% and that of services PMI was 49.4%. Any reading below 50% indicates a contraction in activities. The manufacturing PMI expanded in March after 16 consecutive months of contraction. It again contracted in April. The services PMI contracted in April after 15 successive months of expansion.
Following the release of April’s nonfarm payrolls, the CME FedWatch shows a 62.7% probability that the central bank will cut the benchmark lending rate by 25 basis points in the September FOMC meeting.
The interest rate futures tool also shows a massive 88.3% probability that the Fed will cut the rate by 50 basis points. Notably, the Fed fund rate has been within the range of 5.25-5.5% since July 2023.
As a result, a few stocks have shown price strength. We have selected five stocks likely to gain in the near term on the back of a favorable Zacks Rank. These companies are — ADMA Biologics Inc. ADMA, Northern Technologies International Corp. NTIC, PlayAGS Inc. AGS, Merchants Bancorp (MBIN) and Strategic Education Inc. STRA.
Here’s How We Arrived At the Picks
We have primarily targeted stocks that have freshly been on a bull run. Stocks seeing price strength recently have a high chance of carrying the momentum forward.
If a stock is continuously witnessing an uptrend, there must be a solid reason or it would have probably crashed. So, looking at stocks capable of beating the benchmark that they have set for themselves seems rational.
However, recent price strength alone cannot create magic. Therefore, other relevant parameters are needed to create a successful investment strategy.
Here’s how you should create the screen to shortlist the current as well as the potential winners.
Screening Parameters:
Percentage Change in Price (4 Weeks) greater than zero: This criterion shows that the stock has moved higher in the last four weeks.
Percentage Change Price (12 Weeks) greater than 10: This indicates that the stock has seen momentum over the last three months. This lowers the risk of choosing stocks that may have drawn attention due to the overwhelming performance of the overall market in a very short period.
Zacks Rank 1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Average Broker Rating 1: This indicates that brokers are also highly hopeful about the stock’s future performance.
Current Price greater than 5: The stocks must all be trading at a minimum of $5.
Current Price/ 52-Week High-Low Range more than 85%: This criterion filters stocks that are trading near their respective 52-week highs. It indicates that these are strong enough in terms of price.
Just these few criteria narrowed down the search from over 7,700 stocks to six.
Let’s discuss five out of these six stocks:
ADMA Biologics is a specialty immune globulin company. ADMA develops, manufactures and intends to market plasma-based biologics for the treatment and prevention of certain infectious diseases.
ADMA’s target patient populations include immune-compromised individuals who suffer from an underlying immune deficiency disease or may be immune-suppressed for medical reasons. ADMA’s lead product candidate, RI-002, which is in Phase III clinical trial, is intended for the treatment of primary immune deficiency disease.
The stock price of ADMA Biologics has soared 46.4% in the past four weeks. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.3% over the last seven days.
Northern Technologies develops and markets rust and corrosion-inhibiting solutions in North America, South America, Europe, Asia, the Middle East and internationally. NTIC provides a portfolio of bio-based and certified compostable polymer resin compounds and finished products under the Natur-Tec brand.
NTIC offers rust and corrosion-inhibiting products, such as plastic and paper packaging, liquids, coatings, rust removers, cleaners, diffusers, and engineered solutions designed for the oil and gas industry under the ZERUST brand.
The stock price of Northern Technologies has jumped 36.8% in the past four weeks. It has an expected earnings growth rate of more than 100% for the current year (ending August 2024). The Zacks Consensus Estimate for current-year earnings has improved 4% over the last 30 days.
PlayAGS designs and supplies gaming products and services for the gaming industry in the United States and internationally. AGS operates through three segments: Electronic Gaming Machines, Table Products, and Interactive Games.
AGS’ product line-up includes Class III EGMs for commercial and Native American casinos, video bingo machines for select international markets, table game products and interactive social casino products.
The stock price of PlayAGS has climbed 24.2% in the past four weeks. It has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 31.6% over the last seven days.
Merchants Bancorp operates as a diversified bank holding company in the United States. MBIN operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking.
MBIN provides multi-family housing and health care facility financing, mortgage warehousing, retail and correspondent residential mortgage banking, agricultural lending and traditional community banking services, through its subsidiaries.
The stock price of Merchants Bancorp has surged 23.4% in the past four weeks. It has an expected earnings growth rate of 17% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 16.8% over the last 30 days.
Strategic Education provides education services through campus-based and online post-secondary education, and programs to develop job-ready skills. STRA operates through the U.S. Higher Education, Australia/New Zealand, and Education Technology Services segments.
STRA’s subsidiaries Strayer University and New York Code and Design Academy (NYCDA), provides a range of post-secondary education and other academic programs in the United States. NYCDA is a New York City-based provider of web and application software development courses.
The stock price of Strategic Education has advanced 22.7% in the past four weeks. STRA has an expected earnings growth rate of 32% for the current year. The Zacks Consensus Estimate for current-year earnings improved 6.7% over the last 30 days.
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.
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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.
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Strategic Education Inc. (STRA) : Free Stock Analysis Report
Northern Technologies International Corporation (NTIC) : Free Stock Analysis Report
ADMA Biologics Inc (ADMA) : Free Stock Analysis Report
Merchants Bancorp (MBIN) : Free Stock Analysis Report
PlayAGS, Inc. (AGS) : Free Stock Analysis Report
