Wall Street has been witnessing a welcome rally in July after reeling under severe volatility in the first half of 2022. This is happening despite the fact that the consumer price index (CPI) soared to its 41-year high in June and a section of economists and financial experts warned that the Fed may hike the benchmark lending rate by 1% in the July FOMC.
Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have tumbled 12.6%, 17.7% and 26.1%, respectively. From their all-time highs, these indexes have tanked 14%, 18.3% and 28.7%, respectively.
However, month to date, the Dow, the S&P 500 and the Nasdaq Composite have gained 3.2%, 3.6% and 4.8%, respectively. From their 52-week lows recorded on Jun 16 or Jun 17, the Dow, the S&P 500 and the Nasdaq Composite have rallied 7.1%, 7.8% and 9.4%, respectively. By any means, these are substantial recoveries.
In line with the July rally, a handful of stocks have also shown price strength. These stocks are likely to gain in the near term buoyed by a favorable Zacks Rank. Five of them are — Immunocore Holdings plc IMCR, Franklin Covey Co. FC, Ardmore Shipping Corp. ASC, StoneX Group Inc. SNEX and Alliance Resource Partners, L.P. ARLP.
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 a mere seven.
Let’s discuss five out of these seven stocks:
Immunocore is a late-stage biotechnology company. IMCR is engaged in the development of a novel class of T cell receptor bispecific immunotherapies designed to treat diseases, including cancer, infectious and autoimmune disease.
The stock price of Immunocore has jumped 33% in the past four weeks. IMCR has an expected earnings growth rate of 34.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last 30 days.
Franklin Covey is an international learning and performance solutions company dedicated to increasing the effectiveness of individuals and organizations. FC provides consulting services, training and education programs, educational materials, publications, assessment and measurement tools, implementation processes, application tools and products designed to empower individuals and organizations to become more effective.
The stock price of Franklin Covey has climbed 30.2% in the past four weeks. FC has an expected earnings growth rate of 26% for the current year (ending August 2022). The Zacks Consensus Estimate for current-year earnings has improved 39.1% over the last 30 days.
Alliance Resource is a diversified producer and marketer of coal to major U.S. utilities and industrial users. ARLP currently operate mining complexes in Illinois, Indiana, Kentucky and Maryland. Some of its mining complexes are underground and one has both surface and underground mines.
Alliance Resource produces a diverse range of steam coals with varying sulfur and heat contents, which enable them to satisfy the broad range of specifications demanded by their customers.
The stock price of ARLP has appreciated 15.4% in the past four weeks. Alliance Resource has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 30 days.
Ardmore Shipping is engaged in the ownership and operation of product and chemical tankers. ASC provides shipping services to customers through voyage charters, commercial pools, and time charters.
Ardmore Shipping provides seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies.
The stock price of ASC has surged 14.4% in the past four weeks. Ardmore Shipping has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
StoneX operates as a global financial services network that connects companies, organizations, traders, and investors to the market ecosystem worldwide. SNEX’s Institutional segment provides equity trading services to institutional clients; and originates, structures, and places debt instruments in capital markets worldwide.
StoneX’s Commercial segment provides risk management and hedging, exchange-traded and OTC products execution and clearing, voice brokerage, market intelligence, physical trading, and commodity financing and logistics services.
The stock price of SNEX has advanced 11.2% in the past four weeks. StoneX has an expected earnings growth rate of 37.4% for the current year (ending September 2022). The Zacks Consensus Estimate for current-year earnings has improved 6.2% 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.
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.
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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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