To pick stocks with the best momentum, astute investors should apply the Dreihaus strategy. This is known as the “buy high and sell high” principle. Without a doubt, it’s a useful investment strategy that helped Richard Driehaus earn a spot on the Barron’s All-Century Team.
To that end, stocks prefer Coca Cola Femsa coffee, toll brothers to land NVIDIA NVDA has been selected as the momentum pick for the day using the Driehaus strategy.
A detailed look at the Dreihaus strategy
Regarding the strategy, Driehaus once said: “I would prefer to invest in a stock that is going up in price and take the risk that it may start to decline than to invest in a stock that is already going down.” is in decline and tries to predict when it will turn.” In line with this insight, the American Association of Individual Investors (AAII) has made the percentage 50-day moving average one of the key parameters before building a portfolio following Dreihaus’s philosophy. considered one of
It is calculated by dividing the numerator (month-end price minus the 50-day moving average) by the 50-day moving average of the month-end price. Another momentum indicator – positive relative strength – is also incorporated into this strategy. A positive percentage 50-day moving average indicates that the stock is trading at a price above its 50-day moving average level, indicating an uptrend.
In addition, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Designed to deliver superior returns over the long term, the strategy also gives weightage to companies with a strong track record of outperforming estimates.
To make the strategy more profitable, we have considered only those stocks which have Zacks Rank #1 (Strong Buy) and 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 (Buy), provide the best upside potential.
, Jax’s rank is equal to #1
It doesn’t matter whether the market is good or bad, stocks with a Zacks Rank #1 have a proven history of outperformance. You can view the full list of today’s Zacks #1 Ranked stocks here.
, Above 2% average EPS growth rate of last 5 years
Strong EPS growth history ensures business improvement
, 12-month EPS growth is 0 and above industry average
Higher EPS growth than industry average indicates better earnings performance
, Last four-quarter average EPS surprises by over 5%
Solid EPS surprising history indicates better value 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 momentum with the highest probability of success.
These few parameters narrowed down the universe of over 7,743 stocks to just 21.
Here are three of the 21 stocks:
Coca Cola Femsa Produces, markets and distributes soft drinks throughout the metropolitan area of Mexico City. KOF’s Momentum Score is B. The trailing four-quarter earnings surprise for KOF averages 21.1%.
toll brothers The nuclear family forms separate and attached domestic communities. TOL has a Momentum Score A. The trailing four-quarter earnings surprise for TOL averages 31.4%.
NVIDIA Worldwide leader in visual computing technologies and inventor of the graphics processing unit. NVDA’s Momentum Score is A. The past four-quarter earnings surprises for NVDA have averaged 9.8%.
You can get the rest of the stocks on this list by signing up for your 2-week free trial in the Research Wizard now and start using this screen in your trading. In addition, you can also create your own strategies and test them before taking the investment risk.
The Research Wizard is a great place to start. Its easy to use. Everything is in simple language. And it’s very comfortable. Start your Research Wizard trial today. And the next time you read an economic report, open the Research Wizard, plug in your searches, and see what gems pop up.
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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or sell short securities and/or hold long and/or short positions in the options mentioned in this material. An affiliated investment advisory firm may own or sell short securities and/or hold long and/or short positions in the options mentioned in this material.
Disclosure: Information on the performance of Zack’s portfolio and strategies is available here: https://www.zacks.com/performance.
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Nvidia Corporation (NVDA): Free Stock Analysis Report
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Coca Cola Femsa SAB de CV (KOF): Free Stock Analysis Report
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