Momentum investing is a strategy that capitalizes on the recent trend of a stock, regardless of direction. For long-term investors, this translates to ‘buying high, hoping to sell even higher.’ Identifying and exploiting these trends is crucial for momentum investors, as the belief is that once a stock establishes a direction, it’s more likely to continue on that path, leading to timely and profitable trades.
While momentum is a popular stock characteristic, defining it can be challenging. The Zacks Momentum Style Score, a component of the Zacks Style Scores, provides valuable insights into momentum. This score helps navigate the debate about which metrics are most relevant by considering factors such as price changes and earnings estimate revisions.
Box (BOX) is a prime example of a company with strong momentum, currently boasting a Momentum Style Score of A. This article will explore the key elements that underpin Box’s positive momentum, including its price performance and earnings estimates.
Box’s Momentum Metrics
To gauge momentum, it’s essential to look at a stock’s short-term price activity, which reflects current investor interest and market sentiment. Comparing a stock to its industry can further pinpoint top performers in a specific sector. Box’s shares have climbed 14.51% in the past week, outperforming the Zacks Internet – Software industry, which declined by 0.23% during the same period. This upward trend extends to the longer term as well, with a monthly price change of 20.19% compared to the industry’s 1.42% performance.
Box’s consistent outperformance isn’t limited to recent weeks. Over the past quarter, shares have surged 26.51%, and over the last year, they’ve climbed 26.21%, exceeding the S&P 500’s returns of 3.12% and 23.92%, respectively.
Trading Volume and Earnings Outlook
Trading volume is another crucial indicator of momentum. A rising stock with above-average volume is generally considered a bullish sign, while a declining stock with high volume suggests bearish sentiment. Box’s average 20-day trading volume is currently 2,399,009 shares, demonstrating strong interest from investors.
The Zacks Momentum Style Score also considers trends in earnings estimate revisions. These revisions, a core component of the Zacks Rank, can offer valuable insights into a company’s future prospects. In the past two months, Box has seen 3 earnings estimates move higher for the full year, compared to none moving lower. These positive revisions have boosted Box’s consensus estimate from $1.57 to $1.63 in the past 60 days. Looking ahead to the next fiscal year, 3 estimates have moved upwards, while no downward revisions have occurred.
Conclusion
Considering all these factors, Box’s Momentum Score of A and its #2 (Buy) Zacks Rank are well-deserved. If you’re seeking a fresh investment opportunity with strong potential for near-term growth, Box is worth adding to your watchlist. Its robust momentum, coupled with positive earnings revisions, suggests that this online storage provider is well-positioned for continued success.
