Momentum investing is all about capitalizing on a stock’s recent trend, regardless of direction. In the ‘long’ context, investors essentially ‘buy high, hoping to sell even higher.’ For momentum investors, taking advantage of these trends is crucial. Once a stock establishes a clear direction, it’s more likely to continue moving in that direction. The goal is to identify these trends and capitalize on them for timely and profitable trades.
While momentum is a popular stock characteristic, defining it can be challenging. The debate about the best and worst metrics to focus on is lengthy. However, the Zacks Momentum Style Score, a component of the Zacks Style Scores, provides a framework for addressing this issue.
Mistras MG, an engineering services company, currently boasts a Momentum Style Score of B, indicating promising momentum characteristics. Let’s delve deeper into the factors driving this score, including price change and earnings estimate revisions.
Analyzing Price Trends
Observing a stock’s short-term price activity is a good indicator of its momentum. This reflects both the current interest in the stock and whether buyers or sellers have the upper hand. Comparing a stock to its industry can help investors identify the best performers within a specific sector.
Mistras MG shares have risen 1.18% over the past week, outperforming the Zacks Electronics – Miscellaneous Products industry, which is down 0.25% during the same period. Over a longer timeframe, the monthly price change of 16.61% for MG compares favorably to the industry’s 2.53% performance.
Consistent outperformance is a sign of a truly winning stock. Mistras shares have risen 35.63% over the past quarter and a remarkable 113.5% in the last year, significantly outpacing the S&P 500’s performance of 5.01% and 23.98%, respectively.
Another crucial factor to consider is the stock’s trading volume. A rising stock with above-average volume is generally a bullish sign, indicating strong buying interest. Conversely, a declining stock on above-average volume is typically bearish. Mistras MG currently averages 144,804 shares traded over the last 20 days.
Earnings Outlook
Beyond price changes, the Zacks Momentum Style Score also considers trends in earnings estimate revisions. These trends are also fundamental to the Zacks Rank, our stock rating system. Positive revisions can be indicative of strong future prospects.
In the case of Mistras MG, 1 earnings estimate has moved higher for the full year over the past two months, compared to none moving lower. These revisions have boosted the consensus estimate for MG, increasing from $0.72 to $0.80 in the past 60 days.
Looking ahead to the next fiscal year, 1 estimate has moved upwards with no downward revisions in the same period. This positive outlook reinforces the optimistic sentiment surrounding the company.
Bottom Line
Given its strong price performance, positive earnings estimate revisions, and Zacks Rank of #2 (Buy), Mistras MG presents itself as a compelling momentum play. If you’re looking for a stock with potential for near-term growth, Mistras MG deserves a spot on your short list.
