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5 Stocks with Solid Relative Price Strength

Earnings growth and valuation multiples are indeed important for investors to gauge potential returns from a stock. However, it’s important to see if the performance of the stock is in sync with its peers, industry, or the appropriate benchmark.  

If the stock’s performance is lacking that of the broader groups despite having 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 outperform their respective industries or benchmarks. This is because, betting on a winner always increases the odds of winning. 

One should however evaluate further room for upside before betting on stocks that have already shown a relative strength in price.

So picking stocks that have outperformed the S&P 500 over a period of time – from 1 week to 3 months – and fundamentals supporting further price gains is a good strategy.  

For making the strategy more successful, we have added positive estimate revisions for the current quarter’s (Q1) earnings to the screen. Upward estimate revisions indicate analysts’ optimism, which generally translate to price appreciation.

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, 4 weeks and 1 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 26 years – can get through.

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 out the 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 5 of the 13 stocks that made it through the screen:

HCA Holdings Inc.(HCA)

ULTA Salon, Cosmetics & Fragrance Inc.(ULTA)

Hasbro Inc.(HAS)

Science Applications International Corp.(SAIC)

Universal Forest Products Inc.(UFPI)

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: http://www.zacks.com/performance.

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UNIVL FST PRODS (UFPI): Free Stock Analysis Report
 
HCA HOLDINGS (HCA): Free Stock Analysis Report
 
ULTA SALON COSM (ULTA): Free Stock Analysis Report
 
HASBRO INC (HAS): Free Stock Analysis Report
 
SCIENCE APP INT (SAIC): Free Stock Analysis Report
 
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