Carvana (CVNA) is a Great Momentum Stock: Should You Buy?

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In "long context," investors will be essentially be "buying high, but hoping to sell even higher." With 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 that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.Below, we take a look at Carvana (CVNA), a company that currently holds a Momentum Style Score of A. 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. Carvana 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 CVNA 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 CVNA, shares are up 1.12% over the past week while the Zacks Internet - Commerce industry is up 1.09% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 8.63% compares favorably with the industry's 8.62% performance as well.Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Shares of Carvana have increased 40.37% over the past quarter, and have gained 177.91% in the last year. On the other hand, the S&P 500 has only moved 18.84% and 15.9%, respectively.Investors should also take note of CVNA'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 CVNA is averaging 2,845,281 shares for the last 20 days..Earnings OutlookThe 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 CVNA.Over the past two months, 3 earnings estimates moved higher compared to 1 lower for the full year. These revisions helped boost CVNA's consensus estimate, increasing from $4.75 to $5.04 in the past 60 days. Looking at the next fiscal year, 2 estimates have moved upwards while there have been 2 downward revisions in the same time period.Bottom LineGiven these factors, it shouldn't be surprising that CVNA 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 Carvana on your short list.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Carvana Co. (CVNA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks