Zacks
8 Stocks with Recent Price Strength to Boost Your Portfolio
Zacks Equity Research
Updated

In the game of stocks, winning means reaching a higher price.

However, finding a win-win strategy is easier said than done. When the markets are choppy marked by widespread global growth concerns, it is difficult for even an insightful investor to come up with a foolproof approach.

One could resort to commonly used techniques to find beaten down stocks that have the potential to recover faster than others. However, even such investment choices bear the risk of disappointment. Particularly, one could be stuck in the value trap if the inherent weakness in a selected stock is not identified.

So, wouldn’t it be a safer strategy to look for stocks that are winners currently and have the potential to gain further?

Here’s how to execute it:

One should primarily look for stocks that have recently been witnessing price increase. Actually, stocks seeing price strength recently have a high chance of carrying the momentum forward.

If a stock is continuously moving higher, there must be a good reason for the rise or else it probably would have fallen like the losers. So, looking at stocks, which have already won the game and are capable of beating the benchmark that they have already set sounds rational.

However, recent price strength alone cannot create the magic. Therefore, you need to set other relevant parameters 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.

Here are eight of the 15 stocks that made it through this screen:

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