Momentum investing revolves around the idea of following a stock’s recent trend in either direction. In the “long” context, investors will essentially be “buying high, but hoping to sell even higher.” With this methodology, taking advantage of trends in a stock’s price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.
While many investors like to look for momentum in stocks, the word can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue.
Below, we take a look at T-Mobile (NASDAQ: TMUS), a company that currently holds a Momentum Style Score of A. We also talk about price change and earnings estimate revisions, two of the main aspects of the Momentum Style Score.
It’s also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. T-Mobile currently has a Zacks Rank of #2 (Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the following one-month period.
You can see the current list of Zacks #1 Rank Stocks here >>>
Is TMUS Stock Set to Beat the Market?
Let’s discuss some of the components of the Momentum Style Score of TMUS stock that show why this wireless carrier shows promise as a solid momentum pick.
Looking at a stock’s short-term price activity is a great way to gauge if it has momentum, since short-term trading can reflect both the current interest in a stock and whether buyers or sellers have the upper hand at the moment. It’s also helpful to compare a security to its industry; the comparison can show investors the best companies in a particular area.
TMUS stock is up 0.32% over the past week, while the Zacks Wireless National industry is up 5.15% over the same time period. The shares have been quite good over a longer time frame, too, as their monthly price change of 4.13% compares favorably with the industry’s 5.3% gain.
Considering longer term price metrics, like performance over the last three months or year, can be advantageous as well. Over the past quarter, TMUS stock has risen 10.52%, and are up 17.17% in the last year. In comparison, the S&P 500 has only moved 3.29% and 5.42%, respectively.
Investors should also take note of the average 20-day trading volume of TMUS stock. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above-average volume is generally a bullish sign, whereas declines on above-average volume are typically bearish. Right now, an average of 2,080,447 shares of TMUS stock have changed hands over the last 20 days.
The Zacks Momentum Style Score encompasses many things, including estimate revisions and a stock’s price movement. Investors should note that earnings estimates are also significant components of the Zacks Rank, and a nice path in that area can be promising. We have recently noticed that TMUS has been on such a path.
Over the past two months, 7 full year earnings estimates have risen, compared to two that moved lower. These revisions helped boost TMUS’s average 2019 EPS estimate, which rose from $3.96 to $4.06 in the past 60 days. Looking at the next fiscal year, over the last two months, eight estimates have moved upwards while there have been three downward revisions.
The Bottom Line on TMUS Stock
Taking into account all of these elements, it should come as no surprise that TMUS stock is a #2 (Buy) name with a Momentum Score of A. If you’ve been searching for a fresh pick that’s set to rise in the near-term, make sure to keep TMUS stock on your short list.
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