WWhen it comes to investing or trading in the short term, they say “the trend is your friend”. And it is undeniable that this is the most profitable strategy. But making sure that a trend lasts in order to profit from it is easier said than done.
Often times, the direction of a stock’s price movement will reverse quickly after taking a position, causing investors to experience a short-term capital loss. So it’s important to make sure that there are enough factors – such as strong fundamentals, positive revisions to earnings estimates, etc. – which could maintain the momentum of the action.
Investors looking to profit from currently moving stocks may find our Recent Price Strength screen very useful. This preset screen is useful for spotting stocks that are on an uptrend supported by the strength of their fundamentals and trading in the upper part of their 52 week high-low range, which is typically an indicator of an uptrend.
Ashtead Group PLC (ASHTY) is one of the many suitable candidates who have come across the screen. Here are the main reasons why this could be a profitable bet for “trendy” investors.
A strong price increase over a 12-week period reflects the continued willingness of investors to pay more for a stock’s potential rise. ASHTY is fairly well positioned in this regard, gaining 10.5% over this period.
However, it is not enough to just watch the price change for about three months, as it does not reflect any trend reversals that could have occurred in a shorter period of time. It is important for a potential winner to maintain the price trend. A price increase of 8.3% over the past four weeks ensures that the trend is still in place for this company’s stock.
Additionally, ASHTY is currently trading at 92.8% of its 52 week high-low range, suggesting that it may be on the verge of a breakout.
When it comes to fundamentals, the stock is currently ranked 2 of Zacks (Buy), meaning it is in the top 20% of over 4,000 stocks that we rank based on trends in estimate revisions. EPS earnings and surprises – the key factors that impact short-term price movements of a stock.
Zacks Rank’s stock rating system, which uses four factors related to earnings estimates to rank stocks into five groups, ranging from Zacks Rank # 1 (Strong Buy) to Zacks Rank # 5 (Strong Sell), has a track impressive externally audited. record, with Zacks Rank # 1 stocks generating an average annual return of + 25% since 1988. You can see the full list of today’s Zacks Rank # 1 (strong buy) stocks here >>>>
Another factor that confirms the fundamental strength of the business is its average broker recommendation # 1 (strong buy). This indicates that the brokerage community is very optimistic about the short-term price performance of the stock.
So ASHTY’s price trend may not be reversing anytime soon.
In addition to ASHTY, there are several other stocks currently going through our Recent Price Strength screen. You can consider investing in them and start looking for the most recent stocks that match these criteria.
This isn’t the only screen that might help you find your next winning stock pick. Depending on your personal investing style, you can choose from over 45 Zacks Premium Displays which are strategically created to beat the market.
However, keep in mind that the key to a successful stock selection strategy is to ensure that it has produced profitable results in the past. You can easily do this with the help of Zacks’ research assistant. In addition to allowing you to check the effectiveness of your strategy, the program contains some of our most successful stock selection strategies.
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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.