5 Stocks Exhibiting Considerable Relative Price Strength

Determining whether a stock has the ability to offer considerable returns usually involves checking whether its earnings and valuation ratios are favorable or not. Simultaneously, it is important to determine whether its price performance exceeds its peers or the industry average.

After taking into consideration such factors, if we see that a stock is underperforming, then it would be prudent to move on and find a better alternative. However, it is important to keep in mind that those outperforming their sector should be selected because they stand a better chance to provide considerable returns.

At the same time, it is imperative that you determine whether or not a stock has relevant upside potential when considering stocks with significant relative price strength. Identifying stocks delivering better performance than the S&P 500 over a period of 1 to 3 months at the least and having fundamentals indicating that it has room to move higher is the best way to go about this.

Finally, it is crucial that we determine whether such an approach has achieved its goals. 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 means that an analyst is more favorably disposed toward the stock. Such a revision 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, 4 weeks and 1 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 26 years – can get through.

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 out the low priced stocks, while a high trading volume would imply adequate liquidity.

VGM Scoreless 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 5 of the 28 stocks that made it through the screen:

Netgear Inc. (NTGR)

Lear Corp. (LEA)

Post Holdings Inc. (POST)

BMC Stock Holdings Inc. (STCK)

Amerisafe Inc. (AMSF)

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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