Stocks in this week’s article are Mr. Cooper Group COOP, Masco Corp. MAS, Option Care Health OPCH, Solaris Oilfield Infrastructure SOI and PulteGroup PHM.

Time to Add These 5 Relative Price Strength Stocks

Wall Street experienced a strong rebound in the first seven months of 2023, recovering from the disappointments of the previous year. The S&P 500 Index surged nearly 20% during this period. This positive performance can be attributed to the steady decline in inflation rates, a strong labor market and the Federal Reserve’s decision to reduce the magnitude of interest rate hikes. The bullish sentiment has even led to U.S. consumer sentiment jumping to the highest level in almost two years.

In particular, the inflation rate is dwindling steadily since June 2022. Consequently, the Fed is approaching the end of its ongoing interest rate hike cycle. The central bank is now more confident about the soft landing of the economy. This could mean a brightening outlook for the stock market.

Investors who want to take advantage of the bullish equity setup should focus on good investment opportunities. One of the ways such potential plays could be identified is to look for signs of relative price strength.

Relative Price Strength Strategy

Investors generally gauge a stock’s potential returns by examining earnings growth and valuation multiples. At the same time, it’s essential to measure the performance of such a stock relative to its industry or peers, or an appropriate benchmark.

If you see that a stock is underperforming on fundamental factors, it would be prudent to move on and find a better alternative. However, those outperforming their respective sectors in terms of price should be selected because they stand a better chance of providing considerable returns.

Then again, it is imperative that you determine whether or not an investment has relevant upside potential when considering stocks with significant relative price strength. Stocks delivering better than the S&P 500 for 1 to 3 months at least and having solid fundamentals indicate room for growth and are the best ways to go about this strategy.

Finally, it is crucial to find out whether analysts are optimistic about the upcoming earnings of these companies. In order to do this, we have added positive estimate revisions for the current quarter’s (Q1) earnings to our screen. When a stock undergoes an upward revision, it leads to additional price gains.

Here are five of the 22 stocks that made it through the screen:

Mr. Cooper Group: The company operates in the mortgage refinancing market. Over the past 30 days, this Dallas, TX-based firm saw the Zacks Consensus Estimate for 2023 move up 18.6%. COOP has a VGM Score of A.

Mr. Cooper Group beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 17.3%, on average. COOP shares have gained 31% in a year.

Masco Corp.: It manufactures, sells and installs home improvement and building products. Over the past 30 days, this Livonia, MI-based firm saw the Zacks Consensus Estimate for 2023 move up 4.2%. MAS has a VGM Score of A.

Masco beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of roughly 12%, on average. MAS shares have gained 17.7% in a year.

Option Care Health: The company provides home and alternate-site infusion services in the United States. Over the past 30 days, this Bannockburn, IL-based firm saw the Zacks Consensus Estimate for 2023 move up 25.5%. OPCH has a VGM Score of A.

Option Care Health’s expected EPS growth rate for three to five years is currently 18.8%, which compares favorably with the industry’s growth rate of 10.9%. It has a trailing four-quarter earnings surprise of roughly 57%, on average. OPCH shares have decreased 2.9% in a year.

Solaris Oilfield Infrastructure: The company is a provider of technical products and services to drillers of oil and gas wells. The 2023 Zacks Consensus Estimate for the Houston, TX-based firm indicates 13.2% year-over-year earnings per share growth.

Solaris Oilfield Infrastructure beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 18.8%, on average. SOI shares have lost 4.8% in a year.

PulteGroup: Based in Atlanta, GA, PulteGroup engages in homebuilding and financial services businesses, primarily in the United States. Over the past 30 days, this firm saw the Zacks Consensus Estimate for 2023 move up 19.8%. PHM has a VGM Score of B.

The 2023 Zacks Consensus Estimate for PulteGroup indicates 3.2% year-over-year earnings per share growth. It has a trailing four-quarter earnings surprise of roughly 19.5%, on average. PHM shares have increased 102.2% in a year.

Masco Corporation (MAS): Free Stock Analysis Report

PulteGroup, Inc. (PHM): Free Stock Analysis Report

Solaris Oilfield Infrastructure, Inc. (SOI): Free Stock Analysis Report

MR. COOPER GROUP INC (COOP): Free Stock Analysis Report

Option Care Health, Inc. (OPCH): Free Stock Analysis Report

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Zacks Investment Research

This article originally appeared on Zacks

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