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Zacks.com featured highlights Equinor, Greif, Richardson Electronics, Mercer International and TFI International
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For Immediate Release

Chicago, IL – July 22, 2022 – Stocks in this week’s article are Equinor ASA EQNR, Greif, Inc. GEF, Richardson Electronics, Ltd. RELL, Mercer International Inc. MERC and TFI International Inc. TFII.

Strong Relative Price Strength Makes These 5 Stocks a Buy

We are into the back half of the year and inflation continues to surprise on the upside. As measured by CPI data, it soared to a 41-year high in June. Together with the Russia-Ukraine war, rising-rate worries and a chorus of growth warnings, Wall Street posted the worst first half of a year in decades. In fact, the broad-market S&P 500 Index fell into the bear market during this period.

But all is not lost. For starters, the labor market remains strong, with unemployment near a 50-year low. Consumer demand, though having slowed, remains robust. Meanwhile, corporate earnings reports have largely held up in the early reporting cycle. However, such positive developments are in the minority, and most of the current macroeconomic signals are overwhelmingly bearish.

In addition to fears that the Fed's aggressive monetary stance to fight mounting inflation could push the economy into a recession, per a large section of market watchers, prolonged supply-chain devastation stemming from China's stringent COVID-19 curbs and the termination of the easy-money policy are likely to reduce aggregate demand, slowing the economy in the process. In other words, it is likely that the mayhem will continue in the near term amid growing concerns about rising interest rates and economic sluggishness.

In the current jittery market environment, for investors who might want to stay exposed to the equity setup, it is time to focus on good investment opportunities. One of the ways such potential plays could be identified is to look for signs of 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.

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