For Immediate Release
Chicago, IL – October 13, 2020 – Stocks in this week’s article are Matson, Inc. MATX, Rent-A-Center, Inc. RCII, Williams-Sonoma, Inc. WSM, RPM International Inc. RPM and Group 1 Automotive, Inc. GPI.
The 5 Best Stocks to Buy on Relative Price Strength
The novel coronavirus outbreak triggered an unprecedented sell-off in equities and bonds. Stocks were clobbered and major indices crashed regularly, while in a bizarre turn of events, the U.S. oil futures hit negative territory.
However, over the past few months, markets, securities and crude have rebounded off their pandemic lows. Restrictions have been loosened and the economy has reopened, with activity limping back toward normalcy. Meanwhile, certain drug candidates and treatments offer a ray of hope in the coronavirus fight.
While the heaviest losses may be in the rear-view mirror, with the S&P 500 and the tech-heavy Nasdaq even attaining their all-time highs in September, the road to recovery remains long and uncertain amid concerns about a fresh wave of the virus in many countries, the Fed’s cautious view of the American economy, the upcoming election-related uncertainty and simmering U.S.-China tensions. Confusion over the second stimulus package to prop up the economy is also weighing on the markets.
Amid the entire coronavirus-induced mayhem, a few stocks held up to the crisis even as the virus knocked down businesses and industries. With the market expected to remain volatile over the near-to-medium term, one of the ways such potential plays could be identified is to look for signs of relative price strength.
The Relative Price Strength Approach
Investors generally gauge a stock’s potential returns by examining earnings growth and valuation multiples. At the same time, it’s important to measure the performance of such a stock relative to its industry or peers, or the appropriate benchmark.
If you see that a stock is underperforming on fundamental factors, then it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance to provide considerable returns.
Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 over a period of 1 to 3 months at the least and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.
Finally, it is important to find out whether analysts are optimistic about the upcoming earnings results of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.
For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/1074351/the-5-best-stocks-you-should-buy-on-relative-price-strength
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.
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Contact: Jim Giaquinto
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