Pick These 5 Stocks With Superb Relative Price Strength

The novel coronavirus outbreak triggered an unprecedented sell-off in equities and bonds. Stocks were clobbered, major indices crashed regularly, while in a bizarre turn of events U.S. oil futures hit negative territory.

However, over the past few weeks, markets, securities and crude have rebounded off their pandemic lows. Deaths and new infections associated with the contagion have slowed down, while certain drug candidates and treatments offer ray of hope in coronavirus fight.   

While the heaviest losses may be in the rearview mirror, the road to recovery remains long and uncertain amid concerns about a second wave of the virus. Moreover, global efforts to combat the pandemic and policy initiatives to rev up economic activity have only had a limited impact so far. 

Amid the entire coronavirus-induced mayhem, there are few stocks built to survive the crisis. One of the ways such potential plays could be identified is to look for signs of relative price strength.

The Relative Price Strength Strategy

Investors generally gauge a stock’s potential returns 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.

1 2 3
View single page >> |

Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.