The U.S. stock market has maintained an impressive rally since January 2023, with the S&P 500 surging 24% in the year and adding another 27% year to date in 2024. This momentum is set to continue as favorable economic data and the Federal Reserve's dovish stance provide strong support. Recent rate cuts, totaling 75 basis points over two meetings, and the possibility of further reductions signal an accommodative monetary policy, fueling investor optimism.

A robust U.S. economy bolsters this rally, with GDP growth of 1.6%, 3%, and 2.8% across the first three quarters of 2024. For investors, focusing on "relative price strength" offers a strategic advantage in this thriving market, highlighting stocks with enduring upward momentum.

At this stage, investors would be wise to consider stocks like Carnival Corporation & plc CCL, InterDigital, Inc. IDCC, Alarm.com Holdings, Inc. ALRM, Abercrombie & Fitch Co. ANF and Kingstone Companies, Inc. KINS based on their relative price strength.

Relative Price Strength Strategy

Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.

Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it.

However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures a winning option on your hands.

Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 for 1 to 3 months, at least, and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.

Finally, it is crucial to find out whether analysts are optimistic about the upcoming earnings of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.

Screening Parameters

Relative % Price change – 12 weeks greater than 0

Relative % Price change – 4 weeks greater than 0

Relative % Price change – 1 week greater than 0

(We have considered those stocks that have been outperforming the S&P 500 over the last 12 weeks, four weeks and one week.)

% Change (Q1) Est. over 4 Weeks greater than 0: Positive current-quarter estimate revisions over the last four weeks.

Zacks Rank equal to 1: Only Zacks Rank #1 (Strong Buy) stocks — that have returned more than 26% annually over the last 26 years and surpassed the S&P 500 in 23 of the last 26 years — can get through. You can see the complete list of today’s Zacks #1 Rank stocks here.

Current Price greater than or equal to $5 and Average 20-day Volume greater than or equal to 50,000: A minimum price of $5 is a good standard to screen low-priced stocks, while a high trading volume would imply adequate liquidity.

VGM Score less than or equal to B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.

Carnival Corporation: Based in Miami, FL, the company is the largest cruise operator in the world. CCL’s current market capitalization is $30.1 billion. CCL has a VGM Score of A.

Over the past 60 days, the Zacks Consensus Estimate for Carnival’s fiscal 2024 earnings has moved up 3.9%. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average being 318.1%. CCL shares have gained 53.2% in a year.

InterDigital: Based in Wilmington, DE, the company is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. IDCC’s expected earnings per share growth rate for three to five years is currently 17.4%, which compares favorably with the industry's growth rate of 8%. The company has a VGM Score of A.

The Zacks Consensus Estimate for 2024 earnings of InterDigital indicates 64.9% growth. It beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average being 163.7%. IDCC shares have jumped 94% in a year.

Alarm.com Holdings: It is a leading cloud-based software platform provider primarily focusing on security and home automation solutions. The Zacks Consensus Estimate for 2024 earnings of Alarm.com indicates 7.3% growth. Headquartered in Tysons, VA, ALRM has a VGM Score of B.

The firm has a market capitalization of $3.3 billion. Alarm.com beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average being 19.6%. ALRM shares have increased 22.6% in a year.

Abercrombie & Fitch: Based in New Albany, OH, Abercrombie & Fitch operates as a specialty retailer of premium, high-quality casual apparel for men, women and kids. Over the past 60 days, the Zacks Consensus Estimate for the firm’s fiscal 2025 earnings has moved up 2.5%, indicating 67.5% year-over-year growth. ANF has a VGM Score of B.

It has a trailing four-quarter earnings surprise of roughly 14.8% on average. ANF shares have surged 109.4% in a year.

Kingstone Companies: It provides personal lines insurance to individuals in the New York City metro area and Long Island. The 2024 Zacks Consensus Estimate for Kingston, NY-based KINS indicates 291.8% year-over-year earnings per share growth. Kingstone Companies has a VGM Score of A.

Over the past 60 days, the Zacks Consensus Estimate for Kingstone Companies’ 2024 earnings has moved up 40%. KINS shares have skyrocketed 508% in a year.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. 

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

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Carnival Corporation (CCL) : Free Stock Analysis Report

Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

InterDigital, Inc. (IDCC) : Free Stock Analysis Report

Alarm.com Holdings, Inc. (ALRM) : Free Stock Analysis Report

Kingstone Companies, Inc (KINS) : Free Stock Analysis Report

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