Yahoo Finance Are You Looking for a Top Momentum Pick? Why Rolls-Royce Holdings PLC (RYCEY) is a Great Choice
Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.
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 Rolls-Royce Holdings PLC (RYCEY), which currently has a Momentum Style Score of A. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.
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. Rolls-Royce Holdings PLC 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 RYCEY is a promising momentum pick, let's examine some Momentum Style elements to see if this company holds up.
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 is also useful to compare a security to its industry, as this can help investors pinpoint the top companies in a particular area.
For RYCEY, shares are up 5.56% over the past week while the Zacks Aerospace - Defense Equipment industry is up 3.15% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 2.14% compares favorably with the industry's 3.16% performance as well.
While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Rolls-Royce Holdings PLC have increased 11.7% over the past quarter, and have gained 83.65% in the last year. In comparison, the S&P 500 has only moved 5.46% and 9.15%, respectively.
Investors should also take note of RYCEY'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, RYCEY is averaging 2,391,901 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 RYCEY.
Over the past two months, 1 earnings estimate moved higher compared to none lower for the full year. These revisions helped boost RYCEY's consensus estimate, increasing from $0.05 to $0.08 in the past 60 days. Looking at the next fiscal year, 1 estimate has 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 RYCEY is a #2 (Buy) stock and boasts a Momentum Score of A. If you're looking for a fresh pick that's set to soar in the near-term, make sure to keep Rolls-Royce Holdings PLC on your short list.
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Rolls-Royce Holdings PLC (RYCEY) : Free Stock Analysis Report
