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.
Investors looking to profit from stocks that are currently moving may find our Last Price Strength screen quite useful. This predefined screen is useful for spotting stocks that are in an uptrend, supported by the strength of their fundamentals, and are trading at the top of their 52-week range low, which is usually a bullish indicator.
Direct Digital Holdings, Inc. (DRCT) is one of several suitable candidates that passed 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. DRCT is quite relevant in this regard, gaining 192.7% 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. The 144.7% price increase over the past four weeks ensures that the trend is still in place for this company’s stock.
Additionally, DRCT is currently trading at 89% 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 #1 (Strong Buy), meaning it is in the top 5% of more than 4,000 stocks we rank based on trends in earnings estimate revisions and EPS surprises – key factors , which affect short-term stock price movements.
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 in DRCT may not reverse anytime soon.
In addition to DRCT, there are several other stocks currently running 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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Zacks Names ‘Top Pick for Double’
Out of thousands of stocks, each of 5 Zacks experts picked their favorite to skyrocket +100% or more in the coming months. Of these 5, Director of Research Sheraz Mian handpicks one that has the most explosive upside of all.
He has been credited with a “landmark medical breakthrough” and is developing a vibrant array of other projects that could change the world for patients suffering from diseases involving the liver, lungs and blood. This is a timely investment that you can catch as it comes out of the bottom of a bear market.
It could rival or outperform other recent stocks slated to double, such as Boston Beer Company, which shot up +143.0% in just over 9 months, and NVIDIA, which boomed +175.9% in one year.
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Direct Digital Holdings, Inc. (DRCT): Free Stock Analysis Report
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.