3 Momentum Anomaly Stocks to Buy as Oil Prices Appear to Decline
AP, IPGP and ECPG momentum anomaly stocks flagged after oil price fears eased and markets steadied following recent volatility.
The broader U.S. equity markets witnessed intense volatility over the past few days, as concerns related to crude oil prices across the globe escalated with the intense war between the United States and Iran continuing for nearly a fortnight. As oil prices touched $120 a barrel, alarm bells were raised, sending shockwaves throughout global bourses. However, the proposed release of the largest oil reserves by the International Energy Agency appeared to soothe the nerves, cooling the soaring oil prices. With President Trump predicting that the war is likely to end very soon, markets regained much of the lost value.
Amid the vagaries of the market, investors often seek to employ time-tested winning strategies to fetch sustained profits. One of the most successful game plans to beat the blues is to bet on momentum stocks, like First Majestic Silver Corp. AG, IPG Photonics Corporation IPGP and Encore Capital Group, Inc. ECPG when value or growth investing fails to generate the desired profits.This approach primarily tends to follow the adage, “the trend is your friend.” At its core, momentum investing is “buying high and selling higher.” It is based on the idea that once a stock establishes a trend, it is more likely to continue in that direction because of the momentum that is already behind it.
Momentum investing is a way to profit from the general human tendency to extrapolate current trends into the future. It is based on that gap in time before the mean reversion occurs, i.e., before prices become rational again.Momentum strategies have been known to be alpha-generative over a long period and across market stages. Therefore, this strategy is quite tricky to implement, as detecting these trends is no child’s play. Here, we have created a strategy to help investors get in on these fast movers and rake in handsome gains. Our screen will help you benefit from long-term price momentum and a short-term pullback in price.
Screening Parameters for Momentum Anomaly Stocks Percentage Change in Price (52 Weeks) = Top #50: This selects the top 50 stocks with the best percentage price change over the last 52 weeks. This parameter ensures we get the best stocks that have appreciated steadily over the past year.Percentage Change in Price (1 Week) = Bottom #10: From the above 50 stocks, we then choose those that are also among the 10 worst performers over a short one-week period. This parameter picks the ones that have witnessed a short-term pullback in price.Zacks Rank #1: Stocks sporting a Zacks Rank #1 (Strong Buy) have a proven history of outperformance irrespective of the market conditions.
You can see the complete list of today’s Zacks #1 Rank stocks here.Momentum Style 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 that include volume change and performance relative to its peers. It indicates when the timing is best to grab a stock and take advantage of its momentum with the highest probability of success. Stocks with a Momentum Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), handily outperform other stocks.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 the stability of price.
Average 20-Day Volume greater than 100,000: A substantial trading volume ensures that these stocks are easily tradable.Here are three of the nine stocks that made it through this screen:Headquartered in Vancouver, Canada, First Majestic engages in the acquisition, exploration, development and production of mineral properties in North America. The company focuses on silver and gold production in Mexico and the United States. The stock has jumped a whopping 335.9% in the past year but declined 5.8% in the past week. First Majestic has a Momentum Score of B.Headquartered in Marlborough, MA, IPG Photonics offers high-power fiber lasers and amplifiers used primarily in materials processing and other diverse applications.
The company sells and markets its products to original equipment manufacturers, system integrators and end users through a direct sales force, as well as through agreements with independent sales representatives and distributors.The stock has soared 98.1% in the past year but lost 11.5% in the past week. IPG Photonics has a Momentum Score of A. Headquartered in San Diego, CA, Encore Capital Group provides debt recovery solutions and other related services for consumers across financial assets worldwide. Through its subsidiaries around the globe, the company purchases portfolios of consumer receivables from major banks, credit unions and utility providers.The stock has surged 102.1% in the past year but lost 5.6% in the past week.
Encore Capital Group has a Momentum Score of A. Story Continues 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 Encore Capital Group Inc (ECPG) : Free Stock Analysis Report First Majestic Silver Corp. (AG) : Free Stock Analysis Report IPG Photonics Corporation (IPGP) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research