Momentum investing is a strategy that focuses on following the recent trend of a stock, whether it’s moving up or down. The idea is that a stock that’s already gaining momentum is more likely to continue in that direction, allowing investors to capitalize on the trend. While momentum is a popular investment concept, pinpointing the best metrics can be challenging. Luckily, the Zacks Momentum Style Score provides a useful framework to assess this factor.
Kratos (KTOS), a military contractor, currently boasts a Momentum Style Score of B, indicating positive momentum. This score is part of the Zacks Style Scores, which complement the Zacks Rank, a stock rating system with a proven track record of success. Kratos also holds a Zacks Rank of #2 (Buy), adding further weight to its potential. Our research shows that stocks with a Zacks Rank of #1 (Strong Buy) or #2 (Buy) and Style Scores of A or B often outperform the market in the short term.
So what makes Kratos a promising momentum pick? Firstly, let’s look at its short-term price activity. Over the past week, KTOS shares have risen 0.75%, outperforming the Zacks Aerospace – Defense Equipment industry’s 1.45% increase. This upward trend continues over a longer time frame; the stock has gained 7.71% this month, compared to the industry’s 7.69% gain. Over the past quarter, Kratos shares have increased by 8.35%, and have risen 41.3% in the past year, exceeding the S&P 500’s 5.01% and 23.98% gains, respectively.
Another important factor to consider is trading volume. A rising stock with above-average volume is typically a bullish sign, whereas a declining stock with high volume is often bearish. Kratos’s average 20-day trading volume is currently 954,998 shares, providing a solid baseline.
The Zacks Momentum Style Score also considers trends in earnings estimates, which are a cornerstone of the Zacks Rank. Positive revisions to earnings estimates often signal a company’s strong growth potential. In the past two months, Kratos has seen 3 upward revisions to earnings estimates for the full year, compared to 1 downward revision. These revisions have pushed Kratos’s consensus estimate higher from $0.39 to $0.47 over the past 60 days. Looking ahead to the next fiscal year, 3 estimates have moved upwards while there has been 1 downward revision in the same period.
In conclusion, Kratos’s positive momentum metrics, including its stock performance, trading volume, and earnings estimate revisions, make it a compelling momentum stock worth considering for investors looking for growth opportunities. Its Momentum Style Score of B and Zacks Rank of #2 (Buy) further solidify its potential.