In this article we explain how you can conveniently screen for momentum stocks with Ziggma’s free stock screener and get great results within a matter of seconds.
Momentum investing is one of the most frequently used investment strategies. For good reason. When the good times last for a while, it can pay off very handsomely. Pick some good growth stocks that the market likes and let the winners run…to a certain point of course. Be sure to carefully watch valuation levels because as the air gets thinner (read: valuations become rich), the risk of a major reversal increases exponentially.
Momentum investing with a long-term time horizon.
Unless you fall into a meme stock trap, momentum stocks generally go up for good reason. The underlying business is doing well and benefits from attractive growth prospects. So, many momentum stocks will turn out to be on a long-term upwards trajectory, making them a great opportunity set for long-term investors as well.
How we define momentum.
How investors define momentum varies considerably. Much depends on your time horizon. As far as we are concerned, as long-term investors we look at three criteria:
- The stock is within 5% from its 52w high.
- The underlying business exhibits strong growth dynamics, current and for the next couple of years.
- Growth is on sound (Read: profitable) footing.
Finding stocks close to their 52w highs.
Ziggma’s free stock screener lets you find stocks that are within 5% of their 52w highs within seconds. Simply select “52w High (%)” in the dropdown menu labelled ESG/Technical and move the dot on the sliding scale to 5%. As of the time of this writing 460 stocks in the Russell 3000 were within 5% of their 52w highs.
Screening for growth stocks.
As mid- to long-term investors we include underlying business growth in our definition of momentum. Screening for long-term and forward-looking revenue and earnings growth will take you a long way. In this search, 26 stocks meet the following growth criteria in addition to proximity to the 52w high:
- Forward revenue growth rate > 10%
- Forward earnings growth rate > 15%
- 5-year annual earnings (ESP) growth rate > 10%
- 5-year annual revenue growth rate > 5%
Making sure growth is on solid footing.
There are examples abound of growth at any cost. Young companies often generate huge growth rates thanks to enormous marketing spend, but ultimately lose bundles of money. Unless you are comfortable with this approach for a specific company that you know well, you want to make sure that a business’ growth is on solid footing. The Ziggma free stock screener makes this easy for you. Simply select key profitability KPIs in the Profitability menu. In the screen require our stocks to generate a net margin of at least 10% and an average return on equity greater than 15%. Seven stocks meet these criteria.
How to capture all relevant KPIs and save time.
A Ziggma Premium subscription ($7.49/month on annual plan and $9.90 on monthly plan) gives you the opportunity to take stock screening to the next level. Along with many other features, it gives you full access to use Ziggma’s proprietary Ziggma Stock Scores in the stock screener. This has two major benefits for you:
- The Ziggma Stock Scores capture literally all relevant financial metrics. Our proprietary algorithm scores stocks against their peers on 35 different key performance indicators over a multi-year period. Chances are you cannot screen more comprehensively.
- Get access to stock sub-scores to screen according to your investment approach. If you are a growth investor, then the growth sub-score is what you will want to use. Value investors will want to screen for stocks with Valuation sub-score greater than 90, for example.
Narrowing down our screener results to stocks with a Ziggma Stock Score of 90 or higher leaves us with shortlist of three high potential stocks and businesses.
If you are on the Ziggma Premium Plan, you can now save this screen configuration to check back some other time and find out whether any new stocks fit these search criteria.
Our mission: Streamline your stock research experience.
Our objective for Ziggma’s stock research proposition is straightforward. We want to provide individual investors with best-in-class data and a streamlined stock research experience. To this end, we believe Ziggma offers you the best stock screener for speed and user experience on the market – no matter whether you are on the free plan or the Premium plan.