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Zacks
Zacks.com featured highlights include Marathon Petroleum, Unum Group, HF Sinclair and Murphy USA
Zacks Equity Research
7 min read

In This Article:

For Immediate Release

Chicago, IL – September 26, 2022 – Stocks in this week’s article are Marathon Petroleum MPC, Unum Group UNM, HF Sinclair DINO and Murphy USA MUSA.

4 Stocks with Recent Price Strength for Volatile Times

The Fed’s latest move to raise its core interest rate by another 0.75% has cast a pall over the stock market. It led to a precipitous drop in the equity indices on Thursday — marking the third consecutive day of declines and falling to lows not seen since July. With this, the Fed Fund rate jumped to the range of 3-3.25% from a mere 0-0.25% in early March. The central bank has hiked the interest rate by 3% so far in 2022.

What stands out is that rates may not have peaked yet, and more toughness could be in store for the remainder of this year and 2023. This is because attempts are being made to cool the 40-year high inflation and prevent it from becoming entrenched.

As such, trading is expected to be choppy for the U.S. stock markets going ahead, even as investors have been witnessing extreme volatility since the beginning of 2022. Risks stemming from recession fears, geopolitical tensions and dwindling liquidity may also lead to a rough road for equities.

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

Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.

Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it.

However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures that you have a winning option on your hands.
 
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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