Are You Looking for a Top Momentum Pick? Why Ralph Lauren (RL) 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 Ralph Lauren (RL), 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. Ralph Lauren 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?
Let's discuss some of the components of the Momentum Style Score for RL that show why this upscale clothing company shows promise as a solid momentum pick.
A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.
For RL, shares are up 0.87% over the past week while the Zacks Textile - Apparel industry is down 0.62% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 7.99% compares favorably with the industry's 5.44% performance as well.
Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Over the past quarter, shares of Ralph Lauren have risen 31.55%, and are up 83.29% in the last year. In comparison, the S&P 500 has only moved 16.43% and 18.63%, respectively.
Investors should also pay attention to RL'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. RL is currently averaging 575,971 shares for the last 20 days.
Earnings Outlook
The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock's price movement. Investors should note that earnings estimates are also significant to the Zacks Rank, and a nice path here can be promising. We have recently been noticing this with RL.
Over the past two months, 2 earnings estimates moved higher compared to none lower for the full year. These revisions helped boost RL's consensus estimate, increasing from $13.63 to $13.74 in the past 60 days. Looking at the next fiscal year, 2 estimates have moved upwards while there have been no downward revisions in the same time period.
Bottom Line
Given these factors, it shouldn't be surprising that RL is a #2 (Buy) stock and boasts a Momentum Score of B. If you're looking for a fresh pick that's set to soar in the near-term, make sure to keep Ralph Lauren on your short list.
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Ralph Lauren Corporation (RL) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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