Grab These 5 Relative Price Strength Stocks for Strong Returns
The U.S. stock market continues its upward climb, with the S&P 500 recently reaching a fresh high. Inflation is steadily easing, interest rates are being cut and economic growth remains robust. The labor market shows resilience, and corporate earnings estimates are on the rise. Additionally, a dip in crude oil prices has helped fuel greater investment in equities.
The Federal Reserve’s goal of achieving a soft landing seems to be materializing, and the market is reflecting that optimism.
Of course, caution is always warranted, as challenges can emerge at any time. However, the current economic landscape appears to be in a balanced, "just right" phase, which could lead to more market highs as we approach the year-end.
In this context, several stocks have exhibited notable relative price strength, standing out as strong performers amid the broader market rally. By focusing on stocks that have already demonstrated upward momentum, investors can potentially capitalize on their continued strength.
At this stage, investors would be wise to consider stocks like Nordstrom, Inc. JWN, Phibro Animal Health Corporation PAHC, AllianceBernstein Holding L.P. AB, Carnival Corporation & plc CCL and Jackson Financial Inc. JXN based on their 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.
Nordstrom, Inc.: The company is a leading fashion specialty retailer in the United States. Headquartered in Seattle, WA, JWN has a VGM Score of A.
The firm has a market capitalization of $3.8 billion. Over the past 60 days, the Zacks Consensus Estimate for Nordstrom’s fiscal 2025 earnings has moved up 5.6%. JWN shares have increased 65.8% in a year.
Phibro Animal Health Corporation: It is a leading global diversified animal health and mineral nutrition company. The fiscal 2025 Zacks Consensus Estimate for Teaneck, NJ-based PAHC indicates 30.3% year-over-year earnings per share growth. Phibro Animal Health has a VGM Score of A.
Over the past 60 days, PAHC saw the Zacks Consensus Estimate for fiscal 2025 move up 8.4%. It beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 4.1%. Phibro Animal Health shares have moved up 96.4% in a year.
AllianceBernstein Holding L.P.: Based in Nashville, TN, the company is a diversified global asset manager. AB’s expected EPS growth rate for three to five years is currently 17.4%, which compares favorably with the industry's growth rate of 14.9%. The company has a VGM Score of A.
The Zacks Consensus Estimate for 2024 earnings of AllianceBernstein Holding indicates 12.3% growth. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 8.9%. AB shares have gone up 22.6% in a year.
Carnival Corporation & plc: Based in Miami, FL, the company is the largest cruise operator in the world. CCL’s current market capitalization is $23.3 billion. CCL has a VGM Score of A.
Notably, over the past 60 days, the Zacks Consensus Estimate for Carnival’s 2024 earnings has moved up 9.2%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, the average being 318.1%. CCL shares have jumped 72.4% in a year.
Jackson Financial Inc.: It is a financial services company, helping Americans grow and protect their retirement savings and income. The 2024 Zacks Consensus Estimate for Lansing, MI-based JXN indicates 46.3% year-over-year earnings per share growth. Jackson Financial has a VGM Score of B.
Jackson Financial beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other, the average being 4.1%. JXN shares have surged 139.3% 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.
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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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Carnival Corporation (CCL) : Free Stock Analysis Report
Nordstrom, Inc. (JWN) : Free Stock Analysis Report
AllianceBernstein Holding L.P. (AB) : Free Stock Analysis Report
Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
Jackson Financial Inc. (JXN) : Free Stock Analysis Report