Introduction
Momentum investing is a strategy deeply ingrained in the world of stocks, revolving around the principle of tracking a stock’s recent trend, be it upward or downward. In the context of going ‘long,’ investors essentially engage in the practice of “buying high, but hoping to sell even higher.” This approach places paramount importance on seizing opportunities presented by a stock’s price trajectory. Once a stock sets its course, the belief is that it is highly likely to continue moving in that direction. The ultimate objective is to harness this momentum, translating it into well-timed and profitable trades.
Yet, momentum, while a popular and tantalizing stock characteristic, can be challenging to pin down. The debate surrounding which metrics to prioritize and which to discard is ongoing. Fortunately, the Zacks Momentum Style Score, a component of the Zacks Style Scores, offers a structured framework to navigate this complexity.
In this analysis, we turn our gaze toward Wix.com (WIX), a company currently bearing a Momentum Style Score of B. We will also delve into price changes and earnings estimate revisions, two pivotal aspects of the Momentum Style Score.
It is worth noting that Style Scores operate as a complement to the Zacks Rank, a stock rating system renowned for its impressive track record of delivering superior performance. Presently, Wix.com holds a Zacks Rank of #1 (Strong Buy). Our research indicates that stocks boasting Zacks Rank #1 (Strong Buy) and #2 (Buy), coupled with Style Scores of A or B, tend to outperform the market over the ensuing one-month period.
Set to Outpace the Market?
To ascertain if WIX presents itself as a promising momentum pick, we will scrutinize several Momentum Style elements to evaluate the standing of this cloud-based web development company.
One of the most telling momentum indicators for a stock is its short-term price activity, as it serves as a reflection of the prevailing market sentiment and the balance between buyers and sellers. Additionally, assessing a security within its industry can help discern the leading companies in that sector.
For WIX, the past week has seen its shares ascend by 5.38%, a noteworthy feat when compared to the Zacks Computers – IT Services industry, which has recorded a 2.96% uptick during the same timeframe. Encouragingly, this momentum transcends the short term, with WIX boasting a monthly price change of 3.45%, outstripping the industry’s 0.28% performance.
When considering more extended timeframes, such as performance over the past three months or year, the picture remains promising for Wix.com. Over the past quarter, WIX shares have soared by an impressive 32.02%, and the past year has witnessed a remarkable surge of 59.3%. In stark contrast, the S&P 500 index has registered much more modest gains, rising by only 7.37% and 15.49%, respectively.
Moreover, investors should pay heed to WIX’s average 20-day trading volume, as volume is a valuable metric in numerous respects. A rising stock, accompanied by above-average volume, typically bodes well for its prospects, signaling bullish sentiment. Conversely, a declining stock coupled with above-average volume tends to paint a bearish picture. Currently, WIX boasts an average trading volume of 597,729 shares over the last 20 days.
Earnings Outlook
The Zacks Momentum Style Score takes into account various factors, encompassing estimate revisions and a stock’s price movement. It is noteworthy that earnings estimates also play a significant role in the Zacks Rank, adding a layer of significance to the equation. Recent developments in this regard within WIX have been particularly noteworthy.
In the past two months, Wix.com has seen four upward revisions compared to none in the opposite direction for the full year. These revisions have notably bolstered WIX’s consensus estimate, which has surged from $2.31 to $3.35 within the past 60 days. Turning an eye to the next fiscal year, six estimates have moved upward, with no downward revisions within the same timeframe.
Conclusion
In light of the comprehensive evaluation of these elements, it becomes apparent that Wix.com is a stock that not only boasts a Zacks Rank of #1 (Strong Buy) but also holds a Momentum Score of B. For investors seeking a fresh pick with the potential for near-term growth, WIX undoubtedly merits a place on their shortlist. This amalgamation of strong momentum and robust fundamentals positions Wix.com as a compelling prospect in the dynamic world of stocks.
