Add These 5 Relative Price Strength Stocks for Better Gains

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.

Screening Parameters

Relative % Price change – 12 weeks greater than 0

Relative % Price change – 4 weeks greater than 0

Relative % Price change – 1 week greater than 0

(We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, four weeks and one week.)

% Change (Q1) Est. over 4 Weeks greater than 0: Positive current quarter estimate revisions over the last four weeks.

Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks – that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years – can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.

Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity.

VGM Score less than or equal to B: Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 or #2 (Buy) offer the best upside potential.

Here are the five stocks that made it through the screen:

Arch Capital Group Ltd. ACGL: Arch Capital Group, headquartered in Pembroke, HM, offers insurance, reinsurance and mortgage insurance across the world. The firm has a VGM Score of B and an excellent earnings surprise history. It has a 100% track of outperforming estimates over the last four quarters at an average rate of 14.8%.

Oasis Midstream Partners LP OMP: Oasis Midstream Partners is a publicly traded master limited partnership formed by oil and gas explorer Oasis Petroleum Inc. (OAS) to own and operate a diversified portfolio of energy infrastructure assets. The 2019 Zacks Consensus Estimate for this Houston, TX-based partnership is $3.26, representing some 79.1% earnings per unit growth over 2018. Next year’s average forecast is $4.44 pointing to another 36.3% growth. Oasis Midstream Partners has a VGM Score of A.

Legg Mason, Inc. LM: Legg Mason is a global asset management firm focused on the growth and preservation of its clients' capital through its proprietary mutual funds and separately-managed accounts (SMAs). Sporting a VGM Score of B, this Baltimore, MD-headquartered company’s expected EPS growth rate for three to five years currently stands at 16.3%, comparing favorably with the industry's growth rate of 8.8%.

Casey’s General Stores, Inc. CASY: Founded in 1959 and headquartered in Ankeny, IA, Casey’s General Stores operates convenience stores under the Casey's and Casey's General Store names in 16 Midwestern states, mainly Iowa, Missouri and Illinois. The company has a VGM Score of A and an excellent earnings surprise history having surpassed estimates in each of the last four quarters.

UniFirst Corporation UNF: One of the largest providers of workplace uniform rentals and protective work gear in North America, UniFirst has a VGM Score of A. Over 30 days, the Wilmington, MA-based company has seen the Zacks Consensus Estimate for FY 2019 and FY 2020 increase 9.2% and 8.9%, to $8.58 and $8.23 per share, respectively.

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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Legg Mason, Inc. (LM) : Free Stock Analysis Report
 
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
 
Unifirst Corporation (UNF) : Free Stock Analysis Report
 
Caseys General Stores, Inc. (CASY) : Free Stock Analysis Report
 
Oasis Midstream Partners LP (OMP) : Free Stock Analysis Report
 
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