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3 Reasons Why Cara Therapeutics (CARA) is a Great Momentum Stock

Many investors like to look for momentum in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for momentum investors in the near term.

This method discovered several great candidates for momentum-oriented investors, but today let's focus in on Cara Therapeutics Inc. ( CARA ) as this stock is looking especially impressive right now. And while there are numerous ways in which this company could be a great choice, we have highlighted three of the most vital reasons for CARA's status as a solid momentum stock below:

Longer Term Price Change for Cara Therapeutics

While any stock can see a spike in price, it takes a real winner to consistently outperform the market. That is why looking at longer term price metrics-such as performance over the past three months or year-- and comparing these to an industry at large can be very useful.

And in the case of CARA, the results are quite impressive. The company has beaten out the industry at large over the past 12 weeks by a margin of 57.4% to -10.9%, while it has also outperformed when looking at the past year, putting up a gain of 142.2%. Clearly, CARA is riding a bit of a hot streak and is worth a closer look by investors.

Fiscal Year EPS Estimate Change for CARA

In addition to price performance, it is also important to take a look at earnings estimate changes for the full year. This can show if CARA is poised to make a run based on fundamentals, or if the company is simply moving on speculation.

Over the past quarter, the full year earnings estimate for CARA has risen by 11.3%. On its own this is impressive, but consider that it beats the industry average of -0.7% too. The trend is undeniably in Cara Therapeutics' favor right now, and it suggests that the momentum might be long lasting for this stock.

CARA Earnings Estimate Revisions Moving in the Right Direction

While the great momentum factors outlined in the preceding paragraphs might be enough for some investors, we should also take into account broad earnings estimate revision trends. A nice path here can really help to show us a promising stock, and we have actually been seeing that with CARA as of late too.

Over the past two months, 2 earnings estimates have gone higher compared to none lower for the full year, while we are also seeing that 2 estimates have moved upwards with no downward revision for the next year time frame too. These revisions have helped to boost the consensus estimate, as two months ago, CARA was expected to post a loss of $1.08 per share for the full year, though today it looks to have a loss of 95 cents for the full year now, representing a solid increase which is something that should definitely be welcomed news to would-be investors.

Bottom Line

Given these factors, investors shouldn't be surprised to note that we have CARA as a security with a Zacks Rank #2 (Buy) and a Momentum Score of 'A'. So if you are looking for a fresh pick that has potential to move in the right direction, definitely keep CARA on your short list as this looks be a stock that is very well-positioned to soar in the near term.

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CARA THERAPEUTC (CARA): 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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