Yahoo Finance 5 Top-Ranked Stocks With Relative Price Strength Tailwinds
The S&P 500 wrapped the month of May with a marginal gain of 0.3% amid the ongoing debt-ceiling saga. Despite this, the broad-market index is up nearly 10% year to date following a pathetic 2022.
With the House passing a bill to avert a catastrophic default and sending the legislation to the Senate just days ahead of a Monday deadline, the market is expected to breathe a sigh of relief. However, last Friday's uptick in inflation via the PCE index — the Fed's preferred inflation gauge — has led to some speculation about whether the Fed will implement another 25 basis point rate hike instead of a pause that is widely expected.
While we are well off the peaks we saw in 2022, we have apparently hit a bed of resistance. In other words, inflation is indeed coming down, but slowly. It means that another small rate hike cannot be ruled out.
In the absence of more visibility, investors who 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
Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.
Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it.
However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures a winning option on your hands.
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 eight stocks that made it through the screen:
Photronics, Inc. PLAB: This produces photomasks that are used in the manufacture of semiconductors and flat panel displays. The fiscal 2023 Zacks Consensus Estimate for Brookfield, CT-based PLAB indicates 3.6% year-over-year earnings per share growth. Photronics has a VGM Score of A.
Over the past 30 days, Photronics saw the Zacks Consensus Estimate for fiscal 2023 move up 10.4%. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters and met in the other. PLAB shares have moved down 1.8% in a year.
Park-Ohio Holdings Corp. PKOH: The company is a manufacturer of capital equipment with a unit dedicated to supply-chain management outsourcing. Over the past 30 days, this Cleveland, OH-based firm saw the Zacks Consensus Estimate for 2023 move up 11.2%. PKOH has a VGM Score of A.
The 2023 Zacks Consensus Estimate for Park-Ohio Holdings indicates 63.1% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 10.8%, on average. PKOH shares have increased 1.7% in a year.
EnerSys (ENS): Based in Reading, PA, the company engages in manufacturing, marketing and distribution of various industrial batteries. EnerSys’s expected EPS growth rate for three to five years is currently 14%, which compares favorably with the industry's growth rate of 10.4%. ENS has a VGM Score of A.
Notably, the fiscal 2024 Zacks Consensus Estimate for EnerSys indicates 28.1% year-over-year earnings per share growth. The company has a market capitalization of $4.1 billion. ENS shares have gone up 44.7% in a year.
Copa Holdings, S.A. CPA: The company offers airline passenger and cargo services to 69 destinations covering 29 countries in North, Central, South America and the Caribbean. Over the past 30 days, this Panama City-based firm saw the Zacks Consensus Estimate for 2023 move up 18.2%. CPA has a VGM Score of A.
Copa Holdings beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 14.6%, on average. CPA shares have surged 53.2% in a year.
Abercrombie & Fitch Co. ANF: Based in New Albany, OH, Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women, and kids. Over the past 30 days, this firm saw the Zacks Consensus Estimate for fiscal 2024 move up 23.1%. ANF has a VGM Score of A.
The fiscal 2024 Zacks Consensus Estimate for Abercrombie & Fitch indicates 604% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 480.6%, on average. ANF shares have increased 51.7% 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.ENSENS
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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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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Photronics, Inc. (PLAB) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
Park-Ohio Holdings Corp. (PKOH) : Free Stock Analysis Report
