Momentum investing, a strategy that revolves around tracking a stock’s recent trend, can be a powerful approach for investors. It essentially involves “buying high, but hoping to sell even higher.” The core idea is to capitalize on a stock’s price trends, believing that once a stock sets a course, it’s likely to continue moving in that direction. This strategy aims for timely and profitable trades based on the stock’s momentum.
While momentum is a widely recognized stock characteristic, defining it precisely can be challenging. However, the Zacks Momentum Style Score, a component of the Zacks Style Scores, offers a solution by helping investors identify key momentum indicators.
In this analysis, we delve into Wix.com (WIX), a company currently boasting a Momentum Style Score of B. We’ll also explore price changes and earnings estimate revisions, two critical aspects of the Momentum Style Score.
Deciphering Wix.com’s Momentum
The Role of Style Scores:
Style Scores complement the Zacks Rank, a renowned stock rating system known for its track record of market outperformance. Wix.com currently enjoys a Zacks Rank of #1 (Strong Buy). Historical data indicates that stocks with Zacks Ranks of #1 (Strong Buy) and #2 (Buy), combined with Style Scores of A or B, typically outperform the market over the following month.
Is WIX Poised to Outperform?
To gauge WIX’s potential as a momentum pick, we’ll examine key Momentum Style components.
Short-Term Price Activity: One way to assess momentum is by examining short-term price movements, which reflect current market sentiment and the balance between buyers and sellers. Comparing a stock’s performance to its industry benchmark can also offer valuable insights.
- Over the past week, WIX shares have surged by 5.38%, outperforming the Zacks Computers – IT Services industry’s 2.96% gain during the same period.
- A broader view reveals that Wix.com’s monthly price change of 3.45% surpasses the industry’s 0.28% performance.
Longer-Term Performance Metrics: Evaluating a stock’s performance over several months or even a year provides a more comprehensive perspective.
- In the past quarter, Wix.com shares have surged by an impressive 32.02%, compared to the industry’s 0.28% performance.
- Over the last year, WIX has experienced remarkable growth, with a gain of 59.3%, significantly surpassing the S&P 500’s 15.49% increase.
Trading Volume: Volume can be a valuable indicator. A rising stock with above-average volume is often seen as bullish, while a declining stock with above-average volume can be bearish.
- Currently, WIX’s 20-day average trading volume stands at 597,729 shares, indicating active interest in the stock.
Earnings Outlook: The Zacks Momentum Style Score takes earnings estimates into account, which is crucial for the Zacks Rank. Positive earnings estimate revisions can enhance a stock’s momentum.
- In the last two months, WIX has witnessed four upward earnings estimate revisions for the full year, contributing to an increase in the consensus estimate from $2.31 to $3.35 within 60 days.
- Looking ahead to the next fiscal year, Wix.com has experienced six upward earnings estimate revisions during the same period, with no downward revisions.
Conclusion
Considering all these factors, it’s evident why Wix.com has earned a #1 (Strong Buy) stock rating with a Momentum Score of B. If you’re on the lookout for a promising pick with short-term growth potential, Wix.com should undoubtedly be on your radar. This analysis underscores Amazon’s commitment to delivering entertainment innovations to its expanding customer base, proving that it’s not just an online retailer but a dynamic player in various sectors.
