SKX - 4 Top-Ranked Stocks Showing Signs of Relative Price Strength | Benzinga
U.S. stock markets have continued their upward trajectory into the first half of 2024, building on a remarkable 2023. The S&P 500 has seen an impressive gain of 15.4% year to date and more than 1% in June itself. On Thursday, the benchmark crossed a historic milestone, breaching the 5,500 mark for the first time and reaching an all-time high of 5,505.35. As a matter of fact, the S&P 500 Index has achieved 32 record highs this year alone.
Recent months have shown favorable inflation data, indicating that peak inflation is behind us, while the labor market remains strong. Additionally, the global supply chain is gradually improving as U.S. corporations adapt and reschedule around China. Despite high inflation and interest rates, the fundamentals of the U.S. economy remain robust.
In a post-FOMC meeting statement on Jun 12, Fed Chairman Jerome Powell hinted at a potential 25-basis-point rate cut this year, with a full 1% reduction in 2025. This optimistic outlook makes relative price strength a compelling tool for investment, leveraging market momentum and economic resilience to drive potential gains.
Relative Price Strength Strategy
Whether a stock has the potential to offer considerable returns is determined primarily by its earnings and valuation ratios. Simultaneously, it is essential to check whether its price performance exceeds its peers or the industry average.
Upon such comparison, if we find that a stock is unable to match up to wider sectoral growth despite having impressive earnings momentum or valuation multiples, it may be better to avoid it.
However, those outperforming their respective industries or benchmarks should be included in your portfolio since they have a higher chance of securing significant returns. Picking a stock that outperforms its peers ensures a winning option on your hands.
Then again, it is imperative that you determine whether or not an investment has relevant upside ...