The U.S. stock market extended its rally into early 2025, following a strong performance in 2024. Despite concerns over trade policies and inflation, investors remained optimistic, driven by solid fourth-quarter earnings. However, mixed economic data and a hawkish Fed stance on interest rate cuts added uncertainty. Geopolitical tensions in the Middle East and Europe further clouded the outlook.
In this environment, relative price strength is a valuable strategy for investors. Stocks outperforming the broader market tend to sustain momentum, offering potential gains even in uncertain conditions. By focusing on strong performers, investors can navigate market volatility more effectively.
At this stage, investors would be wise to consider stocks like EnerSys (ENS), Pacira BioSciences PCRX, Celestica Inc. CLS and Enova International ENVA based on their relative price strength.
Investors generally gauge a stock’s potential returns by examining earnings growth and valuation multiples. At the same time, it’s essential to measure the performance of such a stock relative to its industry or peers or an appropriate benchmark.
If you see that a stock is underperforming on fundamental factors, it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance of providing considerable returns.
Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 for 1 to 3 months, at least, and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.
Finally, it is crucial to find out whether analysts are optimistic about the upcoming earnings of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.
Relative % Price change – 12 weeks greater than 0
Relative % Price change – 4 weeks greater than 0
Relative % Price change – 1 week greater than 0
(We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, four weeks and one week.)
% Change (Q1) Est. over 4 Weeks greater than 0: Positive current-quarter estimate revisions over the last four weeks.
Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks — that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years — can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.
Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity.
VGM Score less than or equal to B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Here are four of the eight stocks that made it through the screen
EnerSys: Based in Reading, PA, the company manufactures, markets and distributes various industrial batteries. ENS’ expected EPS growth rate for three to five years is currently 18%, which compares favorably with the industry's growth rate of 12.3%. The company has a VGM Score of A.
The Zacks Consensus Estimate for EnerSys’ fiscal 2025 earnings per share indicates 18.7% year-over-year growth. Over the past 60 days, the Zacks Consensus Estimate for its fiscal 2025 earnings has moved up 11.9%. ENS shares have gained 12.6% in a year.
Pacira BioSciences: Based in Tampa, FL, the company develops and sells proprietary pharmaceutical products primarily for use in hospitals and ambulatory surgery centers. PCRX beat the Zacks Consensus Estimate for earnings in two of the last four quarters, met in one and missed in the other. It has a trailing four-quarter earnings surprise of roughly 7.1%, on average. The company has a VGM Score of A.
Over the past 60 days, the Zacks Consensus Estimate for Pacira BioSciences’ 2025 earnings has moved up 21%, indicating 6.5% year-over-year growth. The company has a market capitalization of $1.2 billion. PCRX shares have gone down 13% in a year.
Celestica Inc.: Based in Toronto, Canada, this company is engaged in offering design, assembly and supply-chain solutions across communications, consumer, server and storage markets worldwide. The Zacks Consensus Estimate for 2025 earnings of Celestica indicates 22.4% growth. CLS has a VGM Score of B.
Celestica beat the Zacks Consensus Estimate for earnings in three of the last four quarters and met in the other. It has a trailing four-quarter earnings surprise of roughly 10.3%, on average. CLS shares have risen 240.6% in a year.
Enova International: It is a leading online financial services provider, using advanced analytics to offer loans, credit lines and financing to consumers and small businesses across the United States, the U.K., Canada, Australia and more. The Zacks Consensus Estimate for 2025 earnings of Enova International indicates 23.8% growth. Headquartered in Chicago, IL, ENVA has a VGM Score of A.
The firm has a market capitalization of $3 billion. Enova International beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average being 9.1%. ENVA shares have surged 98.9% in a year.
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.ENSENS
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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.
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Celestica, Inc. (CLS) : Free Stock Analysis Report
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