Understanding Momentum Investing with Zacks Style Scores

Momentum investing is a strategy that has garnered attention for its focus on capturing gains by riding the trends in stock prices or earnings outlooks. A crucial tool for investors in this domain is the Zacks Style Scores, which rate stocks based on their value, growth, and momentum characteristics. Specifically, the Momentum Style Score can pinpoint opportune times to invest in high-momentum stocks by analyzing factors such as one-week price change and the monthly percentage change in earnings estimates.

Case Study: NetApp’s (NTAP) Momentum Surge

NetApp, a company specializing in enterprise storage and data management, exemplifies a momentum stock with its Zacks Rank #1 (Strong Buy) and a Momentum Style Score of B. Notably, the stock has experienced a significant uptick, rising 0.8% in one week and 19.5% over four weeks, with a remarkable one-year gain of 69.6%. This upward trend is supported by robust earnings performance, with fiscal 2024 estimates revised upwards by analysts, highlighting NetApp’s strong momentum and potential for investors.

Exploring Upbound Group’s (UPBD) Momentum

Another compelling example of momentum investing is Upbound Group, formerly Rent-A-Center, Inc. With a Momentum Style Score of B and a VGM Score of B, the company stands out for its 49.3% gain over the past year. The recent weeks have seen a 2.9% increase, demonstrating UPBD’s potential as a momentum stock. The positive revisions in earnings estimates for 2024 further cement its position on investors’ shortlist for momentum investments.

Becton Dickinson (BDX) Riding the Momentum Wave

Becton Dickinson, a medical technology firm, also showcases the attributes of a successful momentum stock. The company’s stock is up 3.6% over the past week and 3.1% over four weeks, with an overall gain of 1.5% in the last year. With a Momentum Style Score of B and revisions in earnings estimates pointing upwards, BDX represents a viable option for momentum investors looking for growth in the medical technology sector.