Are You Looking for a Top Momentum Pick? Why Valmont Industries (VMI) is a Great Choice
Even though momentum is a popular stock characteristic, it can be tough to define. Debate surrounding which are the best and worst metrics to focus on is lengthy, but the Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.
Below, we take a look at Valmont Industries (VMI), a company that currently holds a Momentum Style Score of B. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.
It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Valmont Industries currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of "A or B" outperform the market over the following one-month period.
You can see the current list of Zacks #1 Rank Stocks here >>>
Set to Beat the Market?
In order to see if VMI is a promising momentum pick, let's examine some Momentum Style elements to see if this infrastructure equipment maker holds up.
Looking at a stock's short-term price activity is a great way to gauge if it has momentum, since this can reflect both the current interest in a stock and if buyers or sellers have the upper hand at the moment. It is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area.
For VMI, shares are up 2.7% over the past week while the Zacks Steel - Pipe and Tube industry is up 2.92% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 15.38% compares favorably with the industry's 2.95% performance as well.
While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Valmont Industries have increased 21.49% over the past quarter, and have gained 34.94% in the last year. In comparison, the S&P 500 has only moved 10.18% and 20.38%, respectively.
Investors should also take note of VMI's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. Right now VMI is averaging 177,740 shares for the last 20 days..
Earnings Outlook
The Zacks Momentum Style Score also takes into account trends in estimate revisions, in addition to price changes. Please note that estimate revision trends remain at the core of Zacks Rank as well. A nice path here can help show promise, and we have recently been seeing that with VMI.
Over the past two months, 4 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost VMI's consensus estimate, increasing from $18.12 to $18.63 in the past 60 days. Looking at the next fiscal year, 4 estimates have moved upwards while there have been no downward revisions in the same time period.
Bottom Line
Taking into account all of these elements, it should come as no surprise that VMI is a #2 (Buy) stock with a Momentum Score of B. If you've been searching for a fresh pick that's set to rise in the near-term, make sure to keep Valmont Industries on your short list.
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Valmont Industries, Inc. (VMI) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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