5 Stocks With Recent Price Strength To Enhance Your Portfolio

Wall Street seems to be carrying on from where it left off in 2019, with the bull run showing no signs of relenting despite the coronavirus outbreak. All three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — look unstoppable in their northbound movement. A stable U.S. economy, an accommodative Fed and better-than-expected corporate earnings and guidance is only going to add fuel to the momentum.

More importantly, despite the outbreak of the coronavirus, total earnings of the S&P 500 index for the ensuing first-quarter 2020, are now expected to be up 1% on 5% higher revenues year over year. Consequently, all three major stock indexes achieved several fresh highs this year. In fact, the benchmark S&P 500 has recorded 14 highs so far this year.

At this stage, wouldn’t it be a safer strategy to look for stocks that are winners currently and have the potential to gain further?

Sounds good? Here’s how to execute it:

One should primarily target stocks that have recently been on a bull run. Actually, stocks seeing price strength recently have a high chance of carrying the momentum forward.

If a stock is continuously witnessing an uptrend, there must be a solid reason or else it would have probably crashed. So, looking at stocks that are capable of beating the benchmark that they have set for themselves seems rational.

However, recent price strength alone cannot create magic. Therefore, you need to set other relevant parameters to create a successful investment strategy.

Here’s how you should create the screen to shortlist the current as well as the potential winners.

Screening Parameters:

Percentage Change in Price (4 Weeks) greater than zero: This criterion shows that the stock has moved higher in the last four weeks.

Percentage Change Price (12 Weeks) greater than 10: This indicates that the stock has seen momentum over the last three months. This lowers the risk of choosing stocks that may have drawn attention due to the overwhelming performance of the overall market in a very short period.

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