October's Momentum Alert: Meta & Vertiv Among Top Picks

Historically, October has been a volatile month for the stock market, making it challenging to pick the top momentum stocks. Therefore, savvy investors should employ the "buy high and sell higher" approach, also known as the Driehaus strategy, to identify momentum stocks. This strategy has helped Richard Driehaus earn a spot on Barron’s All-Century Team.To that end, stocks like Meta Platforms, Inc. META and Vertiv Holdings Co. VRT have been selected as today’s momentum picks using the Driehaus strategy.Breaking Down the Driehaus Strategy: A Guide for InvestorsRegarding the strategy, Driehaus once said: “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in decline and try to guess when it will turn around.” In line with this insight, the American Association of Individual Investors (AAII) considered the percentage 50-day moving average as one of the key criteria when creating a portfolio, following Driehaus’ philosophy.It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator — positive relative strength — has also been included in this strategy. A positive percentage 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.Moreover, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was made to provide better returns over the long term.Step-by-Step Guide to Screening Stocks Using Research WizardTo make the strategy more profitable, we have considered only those stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential. • Zacks Rank less than or equal to 2Whether the market is strong or weak, stocks with a Zacks Rank #1 or 2 have a proven track record of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.• Last 5-year average EPS growth rates above 2%Strong EPS growth history ensures an improving business• Trailing 12-month EPS growth greater than 0 and industry medianHigher EPS growth compared to the industry average indicates superior earnings performance• Last four-quarter average EPS surprise greater than 5%Solid EPS surprise history indicates better price performance• Positive percentage change in 50-day moving average and relative strength over 4 weeksPositive percentage change in the 50-day moving average and the relative strength signal uptrend• Momentum Score equal to or less than BA favorable momentum score indicates that it is ideal for capitalizing on momentum with the highest probability of success.These few parameters have narrowed the universe of over 7,743 stocks to only 37.Here are the top two of the 37 stocks:Meta PlatformsMeta Platforms develops products that help people connect and share globally through mobile devices, personal computers, and wearables. Meta Platforms has a Zacks Rank #2 and a Momentum Score of A. The trailing four-quarter earnings surprise for META is 20.5%, on average.VertivVertiv designs and produces essential digital infrastructure technologies and lifecycle solutions for data centers, communication networks, and industrial settings worldwide. Vertiv has a Zacks Rank #2 and a Momentum Score of A. The trailing four-quarter earnings surprise for VRT is 10.7%, on average.You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.Click here to sign up for a free trial to the Research Wizard today.Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.See "2nd Wave" AI stocks 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 Vertiv Holdings Co. (VRT): Free Stock Analysis Report Meta Platforms, Inc. (META): 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