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Zacks.com featured highlights: NVIDIA, Central Garden & Pet, Hecla Mining, MasTec and Amphastar Pharmaceuticals

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For Immediate Release

Chicago, IL - September 01, 2016 - Stocks in this week's article include: NVIDIA Corporation ( NVDA ), Central Garden & Pet Company ( CENT ), Hecla Mining Co. ( HL ), MasTec, Inc. ( MTZ ) and Amphastar Pharmaceuticals, Inc. ( AMPH ).

Screen of the Week of Zacks Investment Research:

Play the Momentum Trend with These 5 Hot Stocks

It has been about two decades since academics identified a "momentum effect" in stock markets. Momentum is basically the tendency of winning stocks (i.e. stocks that have outperformed the market in recent times) to keep winning and losing stocks to keep losing.

At the core, momentum investing calls for investors to "Buy High, Sell Higher."

It is based on the idea that once a stock establishes a trend, it is more likely to continue in that direction instead of moving against the drift. Unlike the hugely-followed Value or Growth styles, this strategy has barely anything to do with the fundamentals of a company, and instead works with the human penchant to extrapolate the flimsiest trends into the future.

Momentum versus Other Styles

It is worth reflecting over how the momentum strategy compares to the other styles of investing over time. Recent research indicates that the size premium for small-cap stocks has shrunk dramatically since the 1980s and value premium has also declined radically since the 1990s. Academics are of the opinion that once research on factor premiums (like size and value) become known to public, the investment world catches on and the premium gradually erodes.

However, unlike other investment styles, momentum premium has stood the test of time, remaining remarkably robust ever since it was identified by financial academics in the 1990s.

Why Does Momentum Strategy Work?

There is a simple reason to this. It works because we are humans!

There's a whole laundry list of behavioral biases that most investors exhibit, and these emotional responses and mistakes are the very reason that momentum strategy works. For instance, we all know of investors who are afraid to book losses, and hence hold onto losing stocks for too long, hoping that they will spring back to their previous highs. On the other hand, investors sell their winners way too early.

Furthermore, investors initially tend to under-react to news, events or data releases. However, once things become clear, they tend to go with the herd and overreact, causing dramatic price reactions.

These behavioral issues extend trends, and thus open up a huge opportunity for momentum players to make profits. So basically, it's a way to profit from the general human tendency to extrapolate current trends into the future.

Momentum investing is based on that gap in time that exists before the mean reversion occurs, i.e. before prices become rational again.

Chase the Alpha

Momentum strategies have been known to be alpha-generative over long periods of time and across markets. So obviously, this strategy is quite tricky to implement, as detecting these trends is no mean feat.

Here, we have created a strategy that will help investors get in on these fast movers and make handsome gains. Our screen will help you to rake in gains from both long-term price momentum and a short-term pullback in price, which would reflect some profit-taking in the stock.

Screening Parameters

Percentage Change Price (52 Weeks) = Top #50: This item selects the top 50 stocks with the best percentage price change over the last 52 weeks. This parameter ensures that we get stocks that have appreciated the most over the past one year.

Percentage Change in Price (1 Week) = Bottom #10: From the top 50 stocks, we choose those that are among the 10 worst performers over a short one-week period.

Zacks Rank #1: No matter what the market conditions are, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance.

MomentumStyle Score of B or better: A top Momentum Style Score knocks out a lot of the screening process as it takes into account several factors including volume change and performance relative to its peers. It indicates when the timing is best to invest in a stock and take advantage of its momentum with the highest probability of success. Stocks with a Momentum Style Score of 'A' or 'B,' when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy), handily outperform others.

Current Price greater than $5: The stocks must all be trading at a minimum of $5.

Market Capitalization = Top #3000: We have chosen stocks that are among the top 3000 in terms of market value, to ensure strong liquidity.

Average 20-Day Volume greater than 100,000: A substantial trading volume ensures that these stocks are easily tradable.

Here are five of the 12 stocks that made it through this screen:

Visual computing company NVIDIA Corporation ( NVDA ), which designs, develops and markets a family of 3D graphics processors, graphics processing units and related software, has gained nearly 186% over the past one year, and sports a Momentum Style Score of 'B'.

Central Garden & Pet Company ( CENT ) produces and markets products for the pet, and lawn and garden supplies industries in the U.S. The stock has appreciated over 106% in the past one year, and has a Momentum Style Score of 'B'.

Hecla Mining Co. ( HL ) discovers, acquires, develops, produces, and markets precious and base metal deposits worldwide globally. The stock has gained nearly 175% over the past one year, and also has a Momentum Style Score of 'A'.

MasTec, Inc. ( MTZ ), an infrastructure construction company, has rallied nearly 92% in the past one year, and carries a Momentum Style Score of 'B'.

Amphastar Pharmaceuticals, Inc. ( AMPH ), a specialty pharmaceutical company which deals with generic and proprietary injectable, inhalation, and intranasal product, has gone up over 46% in the past one year, and flaunts a Momentum Style Score of 'A'.

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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Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don't wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111

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.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112

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Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros .

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Contact: Jim Giaquinto

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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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NVIDIA CORP (NVDA): Free Stock Analysis Report

CENTRAL GARDEN (CENT): Free Stock Analysis Report

HECLA MINING (HL): Free Stock Analysis Report

MASTEC INC (MTZ): Free Stock Analysis Report

AMPHASTAR PHARM (AMPH): 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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