7 Stocks With Recent Price Strength To Enhance Your Returns

Investors are always on the lookout for a winning strategy, which is easier said than done. When markets are rattled by widespread global growth concerns, it is difficult for even the most perceptive investors to come up with a foolproof plan.

No matter how disciplined and systematic investors are, equity market volatility will always manage to get the better of them. While a few lucky ones rake in the moolah, others fall victim to ad hoc strategies.

One could resort to commonly used techniques to find beaten-down stocks that have the potential to recover faster than others. However, even such investment choices bear the risk of disappointment. Particularly, one could be stuck in a value trap if the hidden weaknesses in selected stock are not identified.

So, wouldn’t it be safer to look for stocks that are winners at present and have the potential to gain further?

Here’s how to execute it:

One should primarily look for stocks that have recently been witnessing price increase. Actually, stocks seeing price strength recently have a high chance of carrying the momentum forward.

If a stock is continuously scaling higher, there must be solid reason backing the rise or else it probably would have yielded like the losers. So, looking at stocks that have already won the game and are capable of beating the benchmark that they have set is rational.

However, recent price strength alone cannot weave the 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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