Investing based on momentum is about following recent trends in a stock’s movement. In a ‘long’ context, investors essentially buy at a high level with hopes of selling at an even higher price. It’s important to capitalize on stock price trends, as once a stock sets a course, it’s likely to continue in the same way. The aim is for a stock’s movement to lead to a timely and profitable trade.Thank you for reading this post, don't forget to subscribe!
Although momentum is a popular stock characteristic, it can be challenging to define. The discussion over the best and worst metrics to focus on has been ongoing, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps resolve this issue.
Here, we assess Amazon (AMZN) with a Momentum Style Score of A. We also explore some key drivers of the Momentum Style Score, such as price change and earnings estimate revisions.
Furthermore, it’s noteworthy that the Style Scores complement the Zacks Rank, the stock rating system which has a strong track record of outperformance. Presently, Amazon holds a Zacks Rank #2 (Buy). Our research shows that stocks with Zacks Ranks #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the next one-month period.
You can see the current list of Zacks #1 Rank stocks here >>>
Ready to surpass the market?
Let’s delve into some elements of the Momentum Style Score for AMZN, demonstrating why this online retailer presents a solid momentum pick.
Assessing a stock’s short-term price activity is a great method to gauge its momentum and current market interest. Comparing a security to its industry can help identify leading companies in a specific sector.
For AMZN, shares have surged 3.58% in the past week, while the Zacks Internet – Commerce industry has declined 1.23% over the same period. Over the long term, the monthly price change of 11.24% for AMZN compares favorably with the industry’s performance of 1.75%.
While any stock can experience price appreciation, consistent market-beating performance distinguishes exceptional stocks. Therefore, evaluating long-term value metrics, such as performance over the last three months or year, is crucial. In the past quarter, Amazon shares have increased by 8.34%, and by 50.58% over the last year, outperforming the S&P 500’s gains of 2.78% and 15.55%, respectively.
Investors should also consider AMZN’s average 20-day trading volume. Volume is a valuable tool, and the 20-day average sets a solid price-to-volume baseline. A stock increasing on above-average volume is generally a bullish sign, while a stock decreasing on above-average volume is typically bearish. AMZN currently maintains an average of 58,393,312 shares over the last 20 days.
The Zacks Momentum Style Score includes analysis of estimate revision trends alongside price changes. It’s worth noting that estimate revision trends are also central to the Zacks Rank. Positive trends in this area can indicate potential, as we’re currently seeing with AMZN.
In the past two months, 11 earnings estimates have been revised upward for the full year. These revisions have elevated AMZN’s consensus estimate from $2.23 to $2.67 over the last 60 days. Looking ahead to the next fiscal year, there have been 11 upward revisions and 1 downward revision during the same period.
Considering these factors, it’s not surprising that AMZN holds the #2 (Buy) stock rating and boasts a Momentum Score of A. If you seek a new pick poised for near-term growth, consider putting Amazon on your radar.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
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