Markets

3 Momentum Stocks Surging Back to 52-Week Highs

The two issues plaguing the current market are the Fed-centric uncertainty and concerns regarding the Chinese growth outlook. We can reasonably expect some improvement in visibility as the Fed begins its two-day policy meeting tomorrow, Sep t.16, whether or not a rate hike is announced.

The global growth issue, particularly uncertainty regarding China, is likely to stay. Chinese data released over the weekend about industrial production reconfirmed what we have been seeing for a while now - the country's economy is steadily losing momentum. Recent missteps by Chinese authorities in dealing with the stock market sell-off and the currency devaluation have only aggravated the situation by stoking fears that the reality could be worse.

While a slowdown in the Chinese economy is unlikely to impact the U.S. economy through trade channels, it could snowball into a major global crisis, especially for many commodity-producing emerging markets.

Now, the (multi-)million-dollar question is whether the world's largest economy is safe. Investors should note that the U.S. is showing strong resilience to the persistent slowdown and is, in fact, witnessing growth. Stepped-up economic activities, improving business conditions, renewed optimism in housing recovery and rising consumer confidence will continue to support the U.S. stock market. While the oil price slump is raising fears of global deflation and economic slowdown, it is actually driving consumer spending, which accounts for more than two-thirds of the U.S. economic growth.

However, the present market weakness and heightened volatility remain headwinds. We can reasonably expect some ray of hope following the Fed announcement later this week, though the questions about China are likely to remain unanswered for some time now.

Amid widespread volatility, investors should be careful. It would be safer to bet on momentum stocks offering high returns in the short term regardless of the market condition. The strategy is to buy hot stocks which have shown an uptrend over the past few weeks or months.

How to Pick the Right Stocks?

While handpicking momentum stocks is quite a daunting task, Zacks stock screener makes this process simpler. First, we selected the stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) and narrowed down the list by screening through the following metrics:

1. Current price at 52-week high

2. Momentum Score of "A" or "B"

The Momentum Style Score indicates when the timing is favorable to enter a stock to take advantage of the momentum with the highest probability of success. The momentum-effect is quite strong among Zacks Rank #1 and 2 stocks because as earnings estimate revisions rise, prices race to keep up and anticipate future estimate revisions, resulting in even bigger gains. For a more in-depth understanding, check out our new style score system .

Here are three stocks for your consideration that are likely to continue to trend higher in the current market.

Dave & Buster's Entertainment, Inc.PLAY

Headquartered in Dallas, TX, Dave & Buster's Entertainment owns and operates restaurants under the Dave & Buster's and Dave & Buster's Grand Sports Café brand names. It offers entrées, appetizers, non-alcoholic and alcoholic beverages; and an assortment of entertainment attractions such as playing games and watching live sports, and other televised events.

The company delivered a positive earnings surprise of 73.91% in the last reported quarter. Earnings estimates also rose 15% for the current year over the past 7 days. The stock gained about 16% over the past 30 days and hit a new 52-week high of $42.90 as yesterday's trading session opened. The company's Zacks Industry Rank is in the top 21%

Dave & Buster's currently sports a Zacks Rank #1 with a Momentum Score of "A".

American Woodmark Corp.AMWD

Headquartered in Winchester, VA, American Woodmark manufactures and distributes kitchen cabinets and vanities for remodeling and home construction markets in the U.S. The company also offers turnkey installation services to its direct builder customers through seven service centers. It sells its products under the American Woodmark, Timberlake, Shenandoah Cabinetry, Shenandoah Value Series and Waypoint Living Spaces brand names.

The company delivered a positive earnings surprise of 37.31% in the last reported quarter, while its estimates went up 14.4% for the current year over the past 30 days. The stock gained nearly 5% over the same time frame. American Woodmark hit a new 52-week high of $70.39 during yesterday's trading session and belongs to a solid Zacks Industry Rank - in the top 3%.

American Woodmark's shares sport a Zacks Rank #1 and a Momentum Score of "A".

Casey's General Stores, Inc.CASY

Headquartered in Ankeny, IA, Casey's General Stores together with its subsidiaries, operates convenience stores under the brand name Casey's General Store in Midwestern states like Iowa, Missouri and Illinois. The company's outlets offer a selection of food, including freshly prepared foods, such as pizza, donuts and sandwiches; beverage and tobacco products; health and beauty aids; automotive products; and other non-food items. Its stores also offer gasoline or diesel for sale on a self-service basis. In addition, the company operates a store that primarily sells tobacco products.

Casey's delivered a positive earnings surprise of 11.35% in the last reported quarter, and witnessed a 4.4% increase in the earnings estimates for the current year over the past 7 days. The stock gained roughly 2% over the past 30 days and hit a new 52-week high of $110.50 during yesterday's trading session. The stock belongs to a solid Zacks Industry Rank - in the top 1%.

Casey's General Stores has a Zacks Rank #1 and a Momentum Score of "A."

These stocks could be attractive choices for investors looking to make a pretty penny in the market but concerned about its direction.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMER WOODMARK (AMWD): Free Stock Analysis Report

CASEYS GEN STRS (CASY): Free Stock Analysis Report

DAVE&BUSTRS ENT (PLAY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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