The U.S. economy is facing the second wave of coronavirus infections that is threatening to derail the much-hyped V-shaped recovery in the second half of this year. Notably, within a month's time after reopening, most of the states have been forced to close some parts of their economies as new cases of coronavirus jumped in as many as 24 states.
The lingering economic and geo-political conflicts between the United States and China have intensified recently. On Jul 23, U.S. Secretary of State Mike Pompeo slammed China over international abuses warning that Asian economic giant's double standard will no longer be tolerated.
On Jul 22, the U.S. government instructed China to close its consulate in Houston, citing that it was being used for spying purposes. China retaliated asking the United States to close its consulate in Chengdu.
The U.S. government has already imposed trade sanctions on 11 major Chinese companies on account of violating human rights in China. On Jul 21, the Department of Justice indicted two Chinese hackers of stealing trade secrets and trying to steal research on potential drugs for coronavirus treatment.
At this stage, wouldn’t it be a safer strategy to look for stocks that are winners and have the potential to gain further?
Sounds Good? Here’s How to Execute It:
One should primarily target stocks that have recently been on a bull run. Actually, stocks seeing price strength recently have a high chance of carrying the momentum forward.
If a stock is continuously witnessing an uptrend, there must be a solid reason or else it would have probably crashed. So, looking at stocks that are capable of beating the benchmark that they have set for themselves seems rational.
However, recent price strength alone cannot create 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.
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.
Zacks Rank 1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
Average Broker Rating 1: This indicates that brokers are also highly hopeful about the stock’s future performance.
Current Price greater than 5: The stocks must all be trading at a minimum of $5.
Current Price/ 52-Week High-Low Range more than 85%: This criterion filters stocks that are trading near their respective 52-week highs. It indicates that these are strong enough in terms of price.
Just these few criteria have narrowed down the search from over 7,700 stocks to just 10.
Here we present five out of those ten stocks:
Daqo New Energy Corp. DQ manufactures and sells polysilicon to photovoltaic product manufactures in China. It offers ready-to-use and packaged polysilicon to meet crucible stacking, pulling and solidification products.
The stock price has jumped 44.3% in the past four weeks. The company has an expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved 17.4% over the last 7 days.
Calix Inc. CALX provides cloud and software platforms, and systems and services required to deliver the unified access network in the United States, the Middle East, Canada, Europe, the Caribbean and internationally.
The stock price has climbed 37.2% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved more than 100% over the last 7 days.
Nautilus Inc. NLS is a fitness solutions company, which designs, develops, sources, and markets cardio and strength fitness products, and related accessories for consumer and commercial use in the United States, Canada and internationally. It operates in two segments, Direct and Retail.
The stock price has appreciated 15.9% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved more than 100% over the last 30 days.
Herbalife Nutrition Ltd. HLF offers nutrition solutions in North America, Mexico, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. Its products include weight management, targeted nutrition, energy, sports, and fitness, and outer nutrition.
The stock has surged 14.7% in the past four weeks. The company has expected earnings growth of 20.6% for the current year. The Zacks Consensus Estimate for the current year has improved 19.3% over the last 30 days.
The Providence Service Corp. PRSC provides healthcare services in the United States. It operates through Non-Emergency Transportation Services and Matrix Investment segments.
The stock price has gained 3% in the past four weeks. The company has expected earnings growth of 52.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.4% over the last 60 days.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.
The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.
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Calix, Inc (CALX): Free Stock Analysis Report
Herbalife LTD. (HLF): Free Stock Analysis Report
DAQO New Energy Corp. (DQ): Free Stock Analysis Report
Nautilus Group, Inc. The (NLS): Free Stock Analysis Report
The Providence Service Corporation (PRSC): 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.