The U.S. stock market has been on an exceptional rally since 2023, with the S&P 500 surging 24.2% that year, followed by a 23.3% gain in 2024. This two-year climb of 53% marks the index's best performance since 1997-98. Despite December's 2.5% decline, casued by inflation concerns and cautious Federal Reserve policies, the market’s strong fundamentals and economic resilience suggest continued upward momentum in 2025.
With a potential rate cut on the horizon and a solid economic backdrop, investors can capitalize on relative price strength as a robust strategy. This approach favors stocks with proven performance amid market volatility, aligning well with ongoing recovery.
At this stage, investors would be wise to consider stocks like Amazon.com AMZN, Vistra Corp. VST, Funko, Inc. FNKO and Grupo Supervielle S.A. SUPV based on their relative price strength.
Relative Price Strength Strategy
Earnings growth and valuation multiples are indeed important for investors to determine a stock's ability to offer considerable returns. But these are also essential for determining whether a stock’s price performance is better than its peers or the industry average.
If a stock’s performance is lacking that of the broader groups, despite 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 are outperforming their respective industry or benchmark. This is because betting on a winner always proves to be lucrative.
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 the four stocks that made it through the screen:
Amazon.com: Founded in 1994, it is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. The 2025 Zacks Consensus Estimate for this firm indicates 20% year-over-year earnings per share growth. Headquartered in Seattle, WA, AMZN has a VGM Score of B.
Amazon.com beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.9%, on average. AMZN shares have risen 46.7% in a year.
Vistra: Based in Irving, TX, the company operates a diverse power generation fleet and provides innovative retail electricity solutions nationwide. VST’s expected EPS growth rate for three to five years is currently 17.4%, which compares favorably with the industry's growth rate of 7.6%. The company has a VGM Score of B.
Notably, the Zacks Consensus Estimate for Vistra’s 2025 earnings per share indicates 36.8% year-over-year growth. Over the past 60 days, the Zacks Consensus Estimate for its 2025 earnings has moved up 5.3%. VST shares have surged 316.5% in a year.
Funko: It designs pop culture-inspired consumer products like figures, apparel, and homeware. The Zacks Consensus Estimate for 2025 earnings of Funko indicate 433.3% growth. Headquartered in Everett, WA, FNKO has a VGM Score of A.
The firm has a market capitalization of $759.3 million. Funko beat the Zacks Consensus Estimate for earnings in three of the last four quarters and met in the other, with the average being 115.7%. FNKO shares have increased 88.2% in a year.
Grupo Supervielle S.A.: Based in Buenos Aires, Argentina, Grupo Supervielle is a financial group with over 130 years of experience, offering diverse financial services across the Latin American country. Over the past 60 days, the Zacks Consensus Estimate for the firm’s 2025 earnings has moved up 39.3%, indicating 4.3% year-over-year growth. SUPV has a VGM Score of B.
It has a trailing four-quarter earnings surprise of roughly 1.8% on average. SUPV shares have soared 455.1% in a year.
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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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