【outta my head rythm strain】4 Top Momentum Stocks Powered by Driehaus Strategy

作者:Knowledge 来源:Exploration 浏览: 【 】 发布时间:2024-10-05 08:13:24 评论数:

Investors who have the propensity to take higher risk can think of investing in momentum stocks to boost their gains. In this outta my head rythm strainrespect, the Driehaus strategy can be used to choose the best momentum stocks using the “buy high and sell higher" theory. Eventually, Richard Herman Driehaus earned his place in Barron’s All-Century Team following the success of this investment strategy.

The American Association of Individual Investors (AAII) proved that the strategy has the potential to offer high returns. AAII’s portfolio, which was developed following the strategy, returned 13.5% and 18.1% in the five- and 10-year time frames, respectively, compared with -1.1% and 4.2% gains registered by the S&P 500. Thus, investors with a high-risk appetite may opt for this strategy to boost their portfolio returns.

【outta my head rythm strain】4 Top Momentum Stocks Powered by Driehaus Strategy


A Detailed Look Into the Driehaus Strategy

【outta my head rythm strain】4 Top Momentum Stocks Powered by Driehaus Strategy


Regarding the strategy, Driehaus once said: “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in a decline and try to guess when it will turn around.” In line with this insight, AAII took into account the percentage 50-day moving average as one of the key criteria before creating a portfolio following Driehaus’ philosophy.

【outta my head rythm strain】4 Top Momentum Stocks Powered by Driehaus Strategy


It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator — positive relative strength — has also been included in this strategy. A positive percentage 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.


Moreover, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was made to provide better returns over the long term.


Screening Parameters


In addition to the 50-day moving average and relative strength, we have considered a few parameters for picking the best stocks. As companies with a strong history of beating estimates usually outperform the market, we have added this parameter to our screen. Also, we have considered only those stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential.


Story continues


• Zacks Rank equal to #1


No matter whether good market or bad, stocks with a Zacks Rank #1 have a proven history of outperformance. You can see


the complete list of today’s Zacks #1 Rank stocks here


.



Last 5-year average EPS growth rates above 2%


Strong EPS growth history ensures improving business



Trailing 12-month EPS growth greater than 0 and industry median


Higher EPS growth compared to the industry average indicates superior earnings performance



Last four-quarter average EPS surprise greater than 5%


Solid EPS surprise history indicates better price performance



Positive percentage change in 50-day moving average and relative strength over 4 weeks


Positive percentage change in 50-day moving average and relative strength signal uptrend



Momentum Score equal to or less than B


A favorable momentum score indicates that it is ideal to take advantage of the momentum with the highest probability of success.


These few parameters have narrowed down the universe of over 6,776 stocks to only nine.


Here are four of the nine stocks:


BWX Technologies, Inc.


BWXT is a manufacturer and seller of nuclear components. It has a Momentum Score of A. The trailing four-quarter positive earnings surprise is 19.8%, on average.


Murphy USA Inc.


MUSA is engaged in marketing of retail motor fuel products and convenience merchandise. It has a Momentum Score of B and a trailing four-quarter positive earnings surprise of 16.6%, on average.


Dollar General Corporation


DG is a provider of merchandise products in the southern, southwestern, Midwestern, and eastern United States. It has a Momentum Score of A and a trailing four-quarter positive earnings surprise of 16.9%, on average.


Medifast, Inc.


MED is a manufacturer and distributer of weight loss, weight management, healthy living products, and other consumable health and nutritional products. It has a Momentum Score of A and four-quarter positive earnings surprise of 14.8%, on average.


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


Dollar General Corporation (DG) : Free Stock Analysis Report


Murphy USA Inc. (MUSA) : Free Stock Analysis Report


MEDIFAST INC (MED) : Free Stock Analysis Report


BWX Technologies, Inc. (BWXT) : Free Stock Analysis Report


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