Investors generally gauge a stock’s potential return by examining earnings growth and valuation multiples. At the same time, it’s important to measure the performance of such a stock relative to its industry or peers, or the appropriate benchmark.

If you see that a stock is underperforming on fundamental factors, then it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance to provide considerable returns.

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 over a period of 1 to 3 months at the least and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.

Finally, it is important to find out whether analysts are optimistic about the upcoming earnings results of these companies. 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 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, four weeks and one 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 last 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 low-priced stocks, while a high trading volume would imply adequate liquidity.

VGM Score less 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 the four stocks that made it through the screen:

Contura Energy, Inc. (CNTE - Free Report) : An operator of metallurgical and thermal coal mines, Contura Energy has a VGM Score of B. Over 30 days, the Bristol, TN-based company has seen the Zacks Consensus Estimate for 2018 and 2019 increase 34.5% and 4.2%, to $20.34 and $16.79 per share, respectively.

Ecopetrol S.A. (EC - Free Report): Ecopetrol is Colombia’s state-run integrated energy firm engaged in upstream and downstream operations. The 2018 Zacks Consensus Estimate for this Bogota-based company is $2.08, representing some 90.8% earnings per share growth over 2017. Next year’s average forecast is $2.23, pointing to another 7.1% growth. Ecopetrol has a VGM Score of A.

Unisys Corporation (UIS - Free Report): Unisys, headquartered in Blue Bell, PA, specializes in securing client operations, increasing efficiency of data centers, enhancing support to their end users and constituents and modernizing their enterprise applications. The firm has a VGM Score of A and a good earnings surprise history. It has a 75% track of outperforming estimates over the last four quarters at an average rate of 70.3%.

Verso Corporation (VRS - Free Report): Founded in 2006 and headquartered in Miamisburg, OH, Verso is a leading North American producer of coated paper. The company has a VGM Score of A. The 2018 Zacks Consensus Estimate for Verso is $2.01, representing some 368% earnings per share growth over 2017. Next year’s average forecast is $3.19, pointing to another 58.7% growth.