Momentum investing involves following a stock's recent trend, which can be positive or negative. In 'long' investing, investors are "buying high, but hoping to sell even higher." Once a stock sets a course, it's likely to stay that way, so investors should take advantage of price trends. A stock's predetermined course should lead to timely and profitable trades.
Momentum is a popular stock trait but hard to quantify. This debate over the best and worst criteria is protracted, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps us. Paladin Energy (PALAF) has a Momentum Style Score of B. We discuss price change and earnings estimate revisions, two Momentum Style Score components.
Style Scores complement Zacks Rank, our stock rating system that has outperformed. Paladin Energy is #2 (Buy) on Zacks. We found that stocks with Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over one month.
The uranium mining company PALAF may be a momentum selection if we consider Momentum Style features. Short-term price action might indicate a stock's momentum by showing current interest and whether buyers or sellers are in control. Comparing a security to its industry might help investors choose the best companies.
PALAF shares rose 14.49% last week, while the Zacks Mining - Miscellaneous industry was flat. Longer term, shares' 21.33% monthly price movement compares favorably to the industry's 6.19%. Any stock can rise, but only a winner can exceed the market. Paladin Energy shares rose 37.88% last quarter and 145.95% last year. Its S&P 500 counterpart has moved 10.11% and 33.15%.
Investors can also consider PALAF's average 20-day trading volume. Volume is valuable in many ways, and the 20-day average provides a decent price-to-volume basis. Rising stocks with above-average volume are bullish, whereas sinking stocks with above-average volume are bearish. PALAF averages 810,219 shares over the past 20 days.
The Zacks Momentum Style Score includes estimate revisions and stock price movement. Earnings estimates also affect the Zacks Rank, so a good path here is promising. We noticed this using PALAF recently.
One earnings projection rose in the past two months, while none fell for the year. PALAF's consensus forecast rose from -$0.02 to $0.01 in 60 days due to these revisions. One forecast has increased for the next fiscal year, while none has decreased.
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