Most of us have heard the saying “trend is your friend”. And this is undoubtedly the key to success when it comes to short-term investing or trading. But it’s not easy to ensure the sustainability of a trend and profit from it.
Often, the direction of a stock’s price movement reverses quickly after taking a position in it, causing investors to suffer a short-term loss of capital. Therefore, it is important to ensure that there are several factors — such as sound fundamentals, positive revisions to earnings estimates, etc. — that could maintain momentum in the stock.
Our Recent Price Strength screen, which is built around a unique short-term trading strategy, could be quite helpful in this regard. This preset screen makes it very easy to pick stocks that have enough fundamental strength to sustain their recent uptrend. Also, the screen only passes stocks that are trading in the upper part of the 52-week high-low range, which is usually a bullish indicator.
WANDdisco PLC (WANSF – Free report) is one of many qualified candidates that passed through the screen. Here are the main reasons why it could be a profitable bet for “trend” investors.
A consistent increase in price over a 12-week period reflects investors’ continued willingness to pay more for a stock’s potential upside. WANSF is quite good in this regard, gaining 51.4% during this period.
However, it is not enough to look at the price change over three months or so, as it does not reflect any trend reversal that could have occurred in a shorter period of time. It is important for a potential winner to maintain the price trend. The 31.8% price increase over the past four weeks ensures that the trend is still valid for this company’s stock.
Furthermore, WANSF is currently trading at 90.4% of its 52-week high-low range, hinting that it may be on the verge of a breakout.
Looking at the fundamentals, the stock currently carries a Zacks Rank #2 (Buy), meaning it is in the top 20% of the more than 4,000 stocks we rank based on trends in earnings estimate revisions and EPS surprises — the key factors that affect the short-term price movements of a stock.
The Zacks Rank 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 an impressive externally audited track record, with Zacks Rank #1 stocks producing an average annual return of +25% since 1988. You can see the full list of current Zacks Rank #1 (Strong Buy) stocks here >>>>
Another factor that confirms the fundamental strength of the company is the Average Broker Recommendation #1 (Strong Market). This indicates that the stockbroking community is highly optimistic about the short-term performance of the share prices.
Thus, the price trend in WANSF may not reverse anytime soon.
In addition to WANSF, there are several other stocks currently passing through the “Recent Price Power” screen. You can consider investing in them and start looking for the newest stocks that match these criteria.
This isn’t the only screen that could help you find your next profitable stock. Based on your personal investment style, you can choose from more than 45 Zacks Premium Monitors strategically created to beat the market.
However, keep in mind that the key to a successful stock-picking strategy is to ensure that it has produced profitable results in the past. You could easily do this with the help of the Zacks Research Wizard. In addition to allowing you to retrospectively check the effectiveness of your strategy, the program comes with some of the most successful stock picking strategies.
Click here to sign up for a free trial of Research Wizard today.