5 Relative Price Strength Stocks With Strong Return Potential

Economic Overview - The U.S. economy demonstrates resilience despite interest rates at a 23-year high, with Wall Street rebounding in early May following a decline in April job additions and a slowdown in Q1 2024 GDP growth [1] - The Department of Labor reported a 0.3% month-over-month increase in the consumer price index (CPI) for April, contributing to positive economic sentiment [1] Relative Price Strength Strategy - Investors should assess stock potential by examining earnings growth and valuation multiples, while also measuring performance relative to industry peers or benchmarks [2] - Stocks outperforming their sectors in price are more likely to provide considerable returns, especially those that have outperformed the S&P 500 over the past 1 to 3 months [2] Analyst Optimism and Earnings Estimates - Positive estimate revisions for upcoming earnings are crucial, as upward revisions typically lead to additional price gains [3] Screening Parameters - Stocks must show a relative % price change greater than 0 over 12 weeks, 4 weeks, and 1 week to be considered for investment [4] - Positive current-quarter estimate revisions over the last four weeks are also a screening criterion [4] - Only Zacks Rank 1 (Strong Buy) stocks, which have historically outperformed the S&P 500, are included in the screening process [4] Selected Stocks - Vital Farms (VITL): Expected 2024 earnings growth of 59.3%, with a 22.1% upward revision in estimates over the past 30 days and a trailing four-quarter earnings surprise of 102.1% [5][6] - Sprouts Farmers Market (SFM): Anticipated 2024 earnings growth of 9.5%, with a 5.4% upward revision in estimates and a trailing four-quarter earnings surprise of 9.2% [6] - Royal Caribbean Cruises (RCL): Projected 2024 earnings per share growth of 61.9%, with a 9.7% upward revision in estimates and a trailing four-quarter earnings surprise of 18.3% [7] - Agnico Eagle Mines Limited (AEM): Expected EPS growth rate of 42.2% for 2024, with a market capitalization of $35.4 billion and a trailing share price increase of 31.1% [8] - Organon & Co. (OGN): Anticipated 2024 earnings growth with a trailing four-quarter earnings surprise of 13.6% and a share price increase of 5.4% [8]