Advertisement
Canada markets close in 4 hours 25 minutes
  • S&P/TSX

    22,179.20
    +72.12 (+0.33%)
     
  • S&P 500

    5,253.51
    +5.02 (+0.10%)
     
  • DOW

    39,768.41
    +8.33 (+0.02%)
     
  • CAD/USD

    0.7384
    +0.0011 (+0.16%)
     
  • CRUDE OIL

    82.60
    +1.25 (+1.54%)
     
  • Bitcoin CAD

    96,382.21
    +2,852.43 (+3.05%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,236.10
    +23.40 (+1.06%)
     
  • RUSSELL 2000

    2,127.23
    +12.88 (+0.61%)
     
  • 10-Yr Bond

    4.1910
    -0.0050 (-0.12%)
     
  • NASDAQ

    16,400.51
    +0.99 (+0.01%)
     
  • VOLATILITY

    12.98
    +0.20 (+1.56%)
     
  • FTSE

    7,969.74
    +37.76 (+0.48%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6834
    +0.0029 (+0.43%)
     

Despite Fast-paced Momentum, Select Energy Services (WTTR) Is Still a Bargain Stock

Momentum investing is essentially the opposite of the tried-and-tested Wall Street adage -- "buy low and sell high." Investors following this investing style typically avoid betting on cheap stocks and waiting long for them to recover. They believe instead that one could make far more money in lesser time by "buying high and selling higher."

Who doesn't like betting on fast-moving trending stocks? But determining the right entry point isn't easy. Often, these stocks lose momentum once their valuation moves ahead of their future growth potential. In such a situation, investors find themselves loaded up on expensive shares with limited to no upside or even a downside. So, going all-in on momentum could be risky at times.

A safer approach could be investing in bargain stocks with recent price momentum. While the Zacks Momentum Style Score (part of the Zacks Style Scores system) helps identify great momentum stocks by paying close attention to trends in a stock's price or earnings, our 'Fast-Paced Momentum at a Bargain' screen comes handy in spotting fast-moving stocks that are still attractively priced.

There are several stocks that currently pass through the screen and Select Energy Services (WTTR) is one of them. Here are the key reasons why this stock is a great candidate.

ADVERTISEMENT

A dash of recent price momentum reflects growing interest of investors in a stock. With a four-week price change of 12.1%, the stock of this company is certainly well-positioned in this regard.

While any stock can see a spike in price for a short period, it takes a real momentum player to deliver positive returns for a longer time frame. WTTR meets this criterion too, as the stock gained 13.2% over the past 12 weeks.

Moreover, the momentum for WTTR is fast paced, as the stock currently has a beta of 2.13. This indicates that the stock moves 113% higher than the market in either direction.

Given this price performance, it is no surprise that WTTR has a Momentum Score of B, which indicates that this is the right time to enter the stock to take advantage of the momentum with the highest probability of success.

In addition to a favorable Momentum Score, an upward trend in earnings estimate revisions has helped WTTR earn a Zacks Rank #1 (Strong Buy). Our research shows that the momentum-effect is quite strong among Zacks Rank #1 and #2 stocks. That's because as covering analysts raise their earnings estimates for a stock, more and more investors take an interest in it, helping its price race to keep up. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Most importantly, despite possessing fast-paced momentum features, WTTR is trading at a reasonable valuation. In terms of Price-to-Sales ratio, which is considered as one of the best valuation metrics, the stock looks quite cheap now. WTTR is currently trading at 0.82 times its sales. In other words, investors need to pay only 82 cents for each dollar of sales.

So, WTTR appears to have plenty of room to run, and that too at a fast pace.

In addition to WTTR, there are several other stocks that currently pass through our 'Fast-Paced Momentum at a Bargain' screen. You may consider investing in them and start looking for the newest stocks that fit these criteria.

This is not the only screen that could help you find your next winning stock pick. Based on your personal investing style, you may choose from over 45 Zacks Premium Screens that are strategically created to beat the market.

However, keep in mind that the key to a successful stock-picking strategy is to ensure that it produced profitable results in the past. You could easily do that with the help of the Zacks Research Wizard. In addition to allowing you to backtest the effectiveness of your strategy, the program comes loaded with some of our most successful stock-picking strategies.

Click here to sign up for a free trial to the Research Wizard today.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Select Energy Services (WTTR) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research