Priceline.com (NASDAQ:PCLN) has charmed us for a long time, guiding conservatively and consistently beating estimates quarter upon quarter. As a result, investors piled on, sending prices higher and higher. In fact, in the month before its first-quarter earnings announcement, share prices rode up close to 9% -- not a mean feat for a stock that trades at over a thousand bucks.
So what changed? At the risk of beating a dead horse, we have to say it was the stronger dollar. Quite honestly, Priceline did everything the way it always has (ex-FX international bookings growth of 29% is nothing to scoff at) and it also beat estimates for the quarter. But management could no longer explain away the fact that they didn’t hedge the FX risk.
The best way to do that would have been through strong growth in outbound travel from the U.S., which has gotten cheaper due to the currency effect. But this didn’t happen and the sluggish domestic business couldn’t be ignored any longer.
So shares lost momentum right away, earning Priceline a Zacks Momentum Style Score of ‘F.’
So What's a Momentum Style Score?
As evident from the Priceline story, stocks can take a sudden turn for the good (or bad), making stock picking a risky game. Every good stock also has its bad day, which further adds to the risk. At the same time, this volatility can be exploited to make significant profits, which is where the Momentum Style Score enters the picture.
The Momentum Style Score is an indication of the time to buy a stock to benefit from rising share prices. The highest score is an A, so getting in on an A and out on a B or C could be a strategy for short term gains. For a more in-depth understanding, check out our Style Score System.
But investors should bear in mind that this is a speculative strategy and not meant for the weak-of-heart.
That said, we pair the momentum score with a Zacks Rank of #1 (Strong Buy) or #2 (Buy), which as you know indicates stocks with high chances of outperforming the market over the next 1-3 months. One of the main factors driving the Zacks Rank is estimate revisions, so stocks with high ranks as well as high momentum scores have even greater chances of short-term appreciation.
Here, we’ve picked out a few stocks based primarily on these two factors-
Ctrip.com International Ltd. (NASDAQ:CTRP)
Chinese travel company Ctrip offers hotel accommodations, airline tickets and package tours. The company’s brand value has increased in recent years as it tapped into the growing middle class to sell leisure travel. It also caters to business customers.
Ctrip has a Zacks Rank #2 and a Momentum Style Score ‘A.’ The company has been topping expectations in recent history with the last four quarters averaging 19.3%. What’s more, estimates for 2015 and 2016 have jumped a respective 136.4% and 30.3% in the last seven days.
The shares jumped 13% over the past month (10%+ in the last five days following better-than-expected results).
Stamps.com (NASDAQ:STMP)
The company operates an online mailing and shipping business across the U.S. It helps individuals, and small and medium businesses select carriers, print shipping labels, schedule pickup, track packages and manage and account for shipping costs.
Stamps.com has a Zacks Rank #2 and Momentum Style Score ‘A.’ The company has consistently topped estimates with the last four quarters averaging 35.2%. Moreover, 2015 and 2016 estimates are trending up.
Shares are up 23% in the last three months. The first driver was its acquisition of Newell Rubbermaid (NYSE:NWL) subsidiary Endicia, which offers high-volume shipping technologies for the U.S. Postal service at March-end. The second driver was strong earnings results in May.
Blue Nile Inc. (NASDAQ:NILE)
Blue Nile is the leading seller of online diamonds and jewelry made out of precious metals, gems, diamonds and pearls. The company’s website includes independently certified diamonds and jewelry.
Blue Nile also carries a Zacks Rank #2 and Momentum Style Score ‘A.’ Its estimate surprise history hasn’t been too great although in the last quarter it beat by a strong 25.0%. Earnings estimates are edging up.
Shares just started trading up (1.3% in the last week).