Yahoo Finance 5 Stocks With Recent Price Strength Amid Recession Fears
Wall Street is once again in the grip of volatility after a strong rally from the beginning of this year to mid-February. This situation arose after several measures of inflation spiked in January following three consecutive months of decline. Market participants are worried that the Fed will pursue a higher interest rate regime and tighter monetary control for longer than expected.
Stubborn inflation compelled the Fed to hike the benchmark interest rate by 4.25% last year. However, a gradual decline in various measures of inflation over the last three months of 2022 raised market participants’ expectations of lesser rate hikes as peak inflation was behind us.
On Feb 1, in its February FOMC meeting, the Fed also reduced the magnitude of interest rate hike by 25 basis points to the range of 4.50% to 4.75%. In the beginning, investors were expecting a maximum of three more rate hikes of 25 basis points each in 2023.
However, the sudden surge in inflation in January changed the whole scenario. Market participants now expect the central bank to raise the interest rate by at least 1% in 2023 with the possibility of another 50-basis point hike in the March FOMC meeting. A rigorous hike in interest rate with tighter monetary control is likely to result in a recession.
However, defying headwinds, a few stocks have shown price strength. These stocks are likely to gain in the near term and are backed by a favorable Zacks Rank. Five of them are — Orion Engineered Carbons S.A. OEC, Weatherford International plc WFRD, Thermon Group Holdings Inc. THR, Orange County Bancorp Inc. OBT, United Bancorporation of Alabama Inc. UBAB.
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: 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 17.
Let’s discuss five out of these 17 stocks:
Orion Engineered Carbons operates as a supplier of Carbon Black. OEC offers products for Coatings, Printing Inks, Polymers, Rubber and other applications. Orion operates in two segments: Specialty Carbon Black and Rubber Carbon Black.
OEC’s Gas Blacks, Furnace Blacks and Specialty Carbon Blacks tint, colorize and enhance the performance of plastics, paints and coatings, inks and toners, adhesives and sealants, tires, and manufactured rubber goods such as automotive belts and hoses.
The stock price of Orion Engineered Carbons has jumped 24% in the past four weeks. It has expected earnings growth of 31.6% for the current year. The Zacks Consensus Estimate for the current year has improved 6.2% over the last 30 days.
Weatherford International provides oil field services and equipment. The company offers drilling solutions, gas well unloading, restoration and other related activities. WFRD operates through three segments: Drilling and Evaluation, Well Construction and Completions, and Production and Intervention.
The stock price of WFRD has climbed 20.2% in the past four weeks. Weatherford International has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 44.6% over the last 30 days.
Thermon Group is engaged in providing engineered thermal solutions, known as heat tracing, for process industries, including energy, chemical processing and power generation. THR’s products provide an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature and flow maintenance and environmental monitoring.
Products offered by THR include heating cables, tubing bundles and control systems while services offered by it include design optimization, engineering, installation and maintenance services.
The stock price of Thermon Group has surged 17.1% in the past four weeks. It has an expected earnings growth rate of 89.2% for the current year (ending March 2023). The Zacks Consensus Estimate for current-year earnings has improved 16.3% over the last 30 days.
Orange County Bancorp provides commercial and consumer banking products and services, and trust and wealth management services to small businesses, middle-market enterprises, local municipal governments, and affluent individuals. OBT accepts various deposit products, including interest-bearing and noninterest-bearing demand accounts, money market deposit accounts, savings accounts, and certificates of deposit.
Orange County Bancorp also offers commercial real estate loans, commercial and industrial loans, commercial real estate construction loans, residential real estate loans, home equity loans, and consumer loans. In addition, OBT provides traditional trust and administration, asset management, financial planning, and wealth management services.
The stock price of OBT has appreciated 14% in the past four weeks. It has an expected earnings growth rate of 31.6% for the current year. The Zacks Consensus Estimate for next-year earnings has improved 11.3% over the last 60 days.
United Bancorporation of Alabama offers checking and savings accounts, certificates of deposit, individual retirement accounts, small business programs, business solutions, merchant services, and cash management services. UBAB also provides various lending services, such as personal loans, business loans, lines of credit, and equipment loans; real estate loans for the agricultural community, agribusiness loans, and working lines of credit; and overdraft services.
In addition, United Bancorporation of Alabama offers debit cards, prepaid cards, Visa credit cards, gift cards, and safe deposit boxes. Further, UBAB provides check cashing, convenience, reorder checks, remote deposit, mobile check deposit, personal storage compartments, Web payment options, insurance products, investment and brokerage, and online and mobile banking services.
The stock price of UBAB has advanced 8.6% in the past four weeks. It has an expected earnings growth rate of 8.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 37% over the last 30 days.
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.
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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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Thermon Group Holdings, Inc. (THR) : Free Stock Analysis Report
Orion Engineered Carbons S.A (OEC) : Free Stock Analysis Report
United Bancorporation of Alabama, Inc. (UBAB) : Free Stock Analysis Report
Weatherford International PLC (WFRD) : Free Stock Analysis Report
Orange County Bancorp, Inc. (OBT) : Free Stock Analysis Report
