5 Stocks With Recent Price Strength for a Steady Portfolio

5 Stocks With Recent Price Strength for a Steady Portfolio

Nalak Das
6 min read
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This year, U.S. stock markets have witnessed their worst first-half in more than five decades. The 40-year high inflation owing to the complete devastation of the global supply-chain system and shortage of manpower, a higher interest rate regime, tight monetary control by the Fed, concerns regarding the U.S. economic slowdown and a possible recession in the near term are the key reasons for the extreme volatility in stock markets.

These sources of volatility are persisting. Therefore, Wall Street is likely to remain volatile in the third quarter too. The geopolitical conflict between Russia and Ukraine that started on Feb 24 is continuing. The Chinese economy is yet to return to normalcy after witnessing the largest outbreak of COVID-19 infections in first-half 2022. These two are the main hindrances to the global supply-chain system.

Despite the market mayhem in the first of 2022, a handful of stocks have shown price strength recently. These stocks are likely to gain in the near term buoyed by a favorable Zacks Rank. Five of them are — USA Truck Inc. USAK, Franklin Covey Co. FC, ProPhase Labs Inc. PRPH, Daqo New Energy Corp. DQ and The Chefs' Warehouse Inc. CHEF.

Here’s How We Arrived at the Picks

We have primarily targeted stocks that have freshly been on a bull run. Stocks seeing price strength recently have a high chance of carrying the momentum forward.

If a stock is continuously witnessing an uptrend, there must be a solid reason or it would have probably crashed. So, looking at stocks capable of beating the benchmark that they have set for themselves seems rational.

However, recent price strength alone cannot create magic. Therefore, other relevant parameters are needed to create a successful investment strategy.

Here’s how you should create the screen to shortlist the current as well as the potential winners.

Screening Parameters:

Percentage Change in Price (4 Weeks) greater than zero: This criterion shows that the stock has moved higher in the last four weeks.

Percentage Change Price (12 Weeks) greater than 10: This indicates that the stock has seen momentum over the last three months. This lowers the risk of choosing stocks that may have drawn attention due to the overwhelming performance of the overall market in a very short period.

Zacks Rank 1: No matter whether market conditions are good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.

Average Broker Rating 1 or 2: This indicates that brokers are also highly hopeful about the stock’s future performance.

Current Price greater than 5: The stocks must all be trading at a minimum of $5.

Current Price/ 52-Week High-Low Range more than 85%: This criterion filters stocks that are trading near their respective 52-week highs. It indicates that these are strong enough in terms of price.

Just these few criteria narrowed down the search from over 7,700 stocks to a mere eight.

Let’s discuss five out of these eight stocks:
 
USA Truck operates as a truckload carrier in the United States, Mexico and Canada. USAK operates in two segments, Trucking and USAT Logistics. The Trucking segment offers motor carrier services as a medium-haul common and contract carrier and freight services. The USAT Logistics segment provides freight brokerage, logistics and intermodal rail services.

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