Do you like to invest with a stock's momentum trends? For ideas on how to start your own momentum search, we ran a screen.
We began by screening the large-cap sector for stocks with strong upward momentum, trading within 5% of their 52-week high.
Then we screened for those that may still be undervalued, by comparing price trends to changes in EPS estimates over the last month.
Based on the assumption that P/E is equal to a constant k, increases in EPS should be matched by increases in price. When they don't match up, a mispricing may have occurred.
We screened for stocks with faster growth in EPS estimates than price over the last month, which may indicate that these names are being undervalued.
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Do you think these stocks have farther to go? Use this list as a starting point for your own analysis.
List sorted by increase in EPS estimate over the last month.
1. Plains All American Pipeline, L.P. (PAA): Engages in the transportation, storage, terminalling, and marketing of crude oil, refined products, and liquefied petroleum gas and other natural gas-related petroleum products in the United States and Canada. Market cap at $12.97B, most recent closing price at $80.42. The stock is currently trading 4.59% below its 52-week high. The EPS estimate for the company's current year increased from 4.64 to 5.23 over the last 30 days, an increase of 12.72%. This increase came during a time when the stock price changed by -4.11% (from 80.82 to 77.5 over the last 30 days).
2. The Travelers Companies, Inc. (TRV): Provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States. Market cap at $24.46B, most recent closing price at $62.88. The stock is currently trading 4.96% below its 52-week high. The EPS estimate for the company's current year increased from 5.77 to 6.38 over the last 30 days, an increase of 10.57%. This increase came during a time when the stock price changed by -1.16% (from 62.91 to 62.18 over the last 30 days).
3. The Allstate Corporation (ALL): Engages in the personal property and casualty insurance, life insurance, retirement, and investment products businesses primarily in the United States. Market cap at $16.83B, most recent closing price at $34.25. The stock is currently trading 4.20% below its 52-week high. The EPS estimate for the company's current year increased from 3.74 to 4.1 over the last 30 days, an increase of 9.63%. This increase came during a time when the stock price changed by 0.89% (from 32.46 to 32.75 over the last 30 days).
4. Whole Foods Market, Inc. (WFM): Engages in the ownership and operation of natural and organic food supermarkets. Market cap at $16.4B, most recent closing price at $89.35. The stock is currently trading 3.19% below its 52-week high. The EPS estimate for the company's current year increased from 2.34 to 2.46 over the last 30 days, an increase of 5.13%. This increase came during a time when the stock price changed by -0.74% (from 83.67 to 83.05 over the last 30 days).
*EPS data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
