Yahoo Finance Are You Looking for a Top Momentum Pick? Why Robinhood Markets, Inc. (HOOD) is a Great Choice
Momentum investing revolves around the idea of following a stock's recent trend in either direction. In the 'long' context, investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.
While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.
Below, we take a look at Robinhood Markets, Inc. (HOOD), a company that currently holds a Momentum Style Score of A. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.
It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Robinhood Markets, Inc. Currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.
You can see the current list of Zacks #1 Rank Stocks here >>>
Set to Beat the Market?
In order to see if HOOD is a promising momentum pick, let's examine some Momentum Style elements to see if this company holds up.
Looking at a stock's short-term price activity is a great way to gauge if it has momentum, since this can reflect both the current interest in a stock and if buyers or sellers have the upper hand at the moment. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.
For HOOD, shares are up 1.9% over the past week while the Zacks Financial - Investment Bank industry is down 0.07% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 15.51% compares favorably with the industry's 0.04% performance as well.
While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Robinhood Markets, Inc. Have increased 26.78% over the past quarter, and have gained 127.85% in the last year. In comparison, the S&P 500 has only moved 3.49% and 25.17%, respectively.
Investors should also pay attention to HOOD's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. HOOD is currently averaging 25,506,982 shares for the last 20 days.
Earnings Outlook
The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock's price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with HOOD.
Over the past two months, 5 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost HOOD's consensus estimate, increasing from $0.25 to $0.61 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been no downward revisions in the same time period.
Bottom Line
Taking into account all of these elements, it should come as no surprise that HOOD is a #2 (Buy) stock with a Momentum Score of A. If you've been searching for a fresh pick that's set to rise in the near-term, make sure to keep Robinhood Markets, Inc. On your short list.
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
Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report
