5 Stocks With Recent Price Strength Amid inflation Concerns

·6 min read

Over the past one and a half months, market participants are speculating an impending inflation in the U.S. economy. The spike in core consumer price index (CPI) data for April and May and April's core PCE price index - Fed's favorite inflation gauge - have made investors jittery about investing in equities.

On Jun 16, in its latest FOMC meeting, Fed acknowledged that the U.S. economy is suffering from inflationary pressure and a rate hike may come before than expected.

However, three major positives are there in Fed Chairman Jerome Powell's post FOMC statement. First, there is no immediate tapering expected for the ongoing $120 billion per month quantitative easing program. Second, a rate hike, if it happens, may not take place before late 2023. Third, Fed officials' informal discussions about a possible deviation from the existing easy-money policy are solely due to an impressive recovery of the U.S. economy, beyond the central bank's own expectations.

Meanwhile, the net worth of American households reached a fresh all-time high in the first quarter of 2021 supported by a faster-than-expected recovery of the U.S. economy from the pandemic-led devastations. On Jun 10, Fed reported that household net worth surged $6.7 trillion or 3.8% in first-quarter 2021 from fourth-quarter 2020 to reach $136.9 trillion.

The pandemic-led devastations of the U.S. economy were not as severe as estimated 16 months ago. U.S. household net worth climbed 6.8%, 3.2%, 5.6% and 3.8%, respectively, in the second, third and fourth quarters of 2020 and first-quarter 2021, sequentially, after sliding 5.6% in first-quarter 2020. An unprecedented fiscal and monetary support helped in reviving household net worth.

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 freshly 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.

Screening Parameters:

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 18.

Here we present five out of those 18 stocks:

Grindrod Shipping Holdings Ltd. GRIN is an international shipping company that owns, charters-in, and operates a fleet of dry bulk carriers and tankers worldwide.

The stock price has soared 42.4% in the past four weeks. The company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 72% over the last 30 days.

Tilly's Inc. TLYS retails casual apparel, footwear, and accessories for young men and women, and boys and girls in the United States. It also provides third-party merchandise assortment across its various product categories.

The company’s stock price has jumped 23.2% in the past four weeks. The company has an expected earnings growth rate of 4.8% for he current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings has improved 44.3% over the last 30 days.

Select Bancorp Inc. SLCT operates as the bank holding company for Select Bank & Trust Company that is engaged in providing personal and business banking products through its branches and the Internet.

The stock price has climbed 22.6% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 35.5% over the last 60 days.

Global Ship Lease Inc. GSL owns and charters containerships of various sizes under long-term, fixed rate charters to world-class container liner companies.

The stock price has rallied 18.1% in the past four weeks. The company has an expected earnings growth rate of 56.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the last 7 days.

Genco Shipping & Trading Ltd. GNK is engaged in the ocean transportation of dry bulk cargoes worldwide. Its vessels transport iron ore, coal, grains, steel products, and other dry-bulk cargoes.

The stock price has surged 15.7% in the past four weeks. The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 7 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Genco Shipping & Trading Limited (GNK) : Free Stock Analysis Report
 
Tillys, Inc. (TLYS) : Free Stock Analysis Report
 
Global Ship Lease, Inc. (GSL) : Free Stock Analysis Report
 
Select Bancorp, Inc. (SLCT) : Free Stock Analysis Report
 
Grindrod Shipping Holdings Ltd. (GRIN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting