Although “the trend is your friend” when it comes to short-term investing or trading, timing your entry into the trend is key to success. And increasing the chances of success by making sure that the sustainability of a trend is not easy.
Often, the direction of a stock’s price movement reverses quickly after taking a position in it, causing investors to suffer a short-term capital loss. So it is important to ensure that there are enough factors – like solid fundamentals, positive revisions to the earnings forecast, etc. – which can support the stock’s momentum.
Our Last Price Strength screen, which is built on a unique short-term trading strategy, can be quite helpful in this regard. This predefined screen makes it really easy to shortlist the stocks that have enough fundamental strength to sustain their recent uptrend. Also, the screen only misses stocks that are trading above their 52-week high-low, which is usually a bullish indicator.
InterDigital (IDCC) is one of several suitable candidates that passed through the screen. Here are the main reasons why this could be a profitable bet for “trend” investors.
A solid 12-week price increase reflects investors’ continued willingness to pay more for the stock’s potential upside. IDCC has been quite relevant in this regard, gaining 12% during this period.
However, it is not enough to look at the price change over three months or so, as it does not reflect any trend reversal that may have occurred in a shorter period of time. It is important for a potential winner to maintain the price trend. A 13.6% price increase over the past four weeks ensures that the trend is still in place for this wireless research and development company’s stock.
Moreover, IDCC is currently trading at 84.1% of its 52-week High-Low Range, hinting that it may be on the verge of a breakout.
Looking at the fundamentals, the stock currently carries a Zacks Rank #2 (Buy), meaning it is in the top 20% of more than 4,000 stocks we rank based on trends in earnings estimate revisions and EPS surprises—the key factors that affect the movement of share prices in the short term.
The Zacks Rank stock rating system, which uses four factors related to earnings estimates to classify stocks into five groups ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive external audited track record, the Zacks #1 Rank stock has generated an average annual return of +25% since 1988. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here >>>>
Another factor that confirms the company’s fundamental strength is its average #1 Broker Recommendation (Strong Buy). This indicates that the brokerage community is very optimistic about the short-term price performance of the stock.
So the price trend at IDCC may not reverse anytime soon.
In addition to IDCC, there are several other stocks currently passing through our “Last Price Strength” screen. You might consider investing in them and start looking for the latest stocks that meet these criteria.
This isn’t the only screen that can help you find your next winning stock pick. Based on your personal investing style, you can choose from over 45 Zacks Premium Screens that are strategically designed to beat the market.
Keep in mind, however, that the key to a successful stock-picking strategy is to ensure that it has produced profitable results in the past. You can easily do this using the Zacks Research Advisor. In addition to allowing you to test the effectiveness of your strategy, the program comes with some of our most successful stock picking strategies.
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InterDigital, Inc. (IDCC): Free Stock Analysis Report
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