Lamb Weston Holdings, Inc. stock (NYSE: LW) increased 10% in the last one month and currently trades near $72 per share. But will the American food processing giant’s stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely?
According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last 20 years, returns for LW stock average close to -0.8% in the next one-month (21 trading days) period after experiencing a 10% rise over the previous one-month (21 trading days) period. Notably, though, the stock is likely to underperform the S&P500 over the next month, with an expected return which would be 1.1% lower compared to the S&P500.
But how would these numbers change if you are interested in holding LW stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test LW stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!
MACHINE LEARNING ENGINE – try it yourself:
IF LW stock moved by -5% over 5 trading days, THEN over the next 21 trading days, LW stock moves an average of 3.5 percent, which implies a return which is 1.4 percent lower than that of the S&P500.
More importantly, there is 68% probability of a positive return over the next 21 trading days and 44% probability of a positive excess return after a -5% change over 5 trading days.
Some Fun Scenarios, FAQs & Making Sense of LW Stock Movements:
Question 1: Is the average return for Lamb Weston Holdings, Inc. stock higher after a drop?
Consider two situations,
Case 1: Lamb Weston Holdings, Inc. stock drops by -5% or more in a week
Case 2: Lamb Weston Holdings, Inc. stock rises by 5% or more in a week
Is the average return for Lamb Weston Holdings, Inc. stock higher over the subsequent month after Case 1 or Case 2?
LW stock fares better after Case 1, with an average return of 3.6% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.1% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Lamb Weston Holdings, Inc. stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold Lamb Weston Holdings, Inc. stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For LW stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.
LW’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Lamb Weston Holdings, Inc. stock by changing the inputs in the charts above.
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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.