Meta Platforms (META) Shows Strong Momentum Potential
Momentum investing revolves around tracking a stock’s current movement, aiming to buy high and sell even higher. This strategy thrives on recognizing trends, as a stock often continues in its established direction. Investors focus on timely trades that capitalize on these price movements.
While momentum is a highly sought-after characteristic in stocks, it lacks a clear definition. A discussion about the best and worst metrics to evaluate momentum is ongoing, but the Zacks Momentum Style Score, part of Zacks’ scoring system, provides clarity.
In this analysis, we examine Meta Platforms (META), which holds a Momentum Style Score of A. We will also explore its price changes and earnings estimate revisions, which play a significant role in this score.
It’s essential to understand that Style Scores complement the Zacks Rank, a prominent stock rating system with a strong track record. Currently, Meta Platforms has a Zacks Rank of #2 (Buy). Research indicates that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy), possessing Style Scores of A or B, tend to outperform the market in the following month.
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Why Meta Might Outperform
This section discusses the factors behind META’s promising momentum, showcasing why this social media giant could be a solid investment choice.
Short-term price movement serves as an excellent indicator of momentum. It reflects the current interest in the stock and illustrates if buyers or sellers are in control. Assessing a stock against its industry can reveal standout companies within that sector.
Recently, Meta’s shares rose by 3.1% over the past week, compared to a 0.71% increase in the Zacks Internet – Software industry. Over a longer period, the stock is performing exceptionally well, with a monthly price change of 9.17% against the industry’s 0.89% growth.
Consistent market outperformance is essential, which is why analyzing long-term price metrics, like performance over the last three months or year, holds value. Over the past quarter, META shares have appreciated by 22.07%, and in the past year, they have surged 42.93%. For reference, the S&P 500 recorded increases of only 3.73% and 24.43%, respectively.
Investors should also monitor META’s average trading volume over the last 20 days, which provides valuable insights. An upward-moving stock with above-average volume often signifies bullish trends, whereas a declining stock typically conveys bearish signals. Currently, META averages 17,022,064 shares traded over the past 20 days.
Analyzing Earnings Revisions
The Zacks Momentum Style Score encompasses various factors, including earnings estimate revisions alongside stock price movements. Notably, earnings estimates significantly impact the Zacks Rank, and positive movements in this area can indicate a favorable direction for META.
In the last two months, 10 earnings estimates for META have been revised upward compared to 7 that trended lower for the full year. This shift improved META’s consensus estimate, rising from $25.18 to $26.70 within the past 60 days. For the next fiscal year, there have been 6 upward revisions against 6 decreases.
Conclusion
Given these insights, it’s clear why META is rated as a #2 (Buy) stock with a Momentum Score of A. For investors seeking a promising stock likely to appreciate in the near term, Meta Platforms undoubtedly deserves consideration.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
