Active investors should pick breakout stocks to get superlative returns. This method involves zeroing in on stocks whose prices vary within a narrow band.<\/p>\n
If the stock price falls below this channel, it could be the best time to sell it off. However, the best time to buy a stock per this strategy is when it is about to break above this trading band. Such stocks offer the prospect of impressive gains.<\/p>\n
To that end, L.B. Foster<\/strong> FSTR, LSI Industries <\/strong>LYTS and OppFi<\/strong> OPFI have been selected as the breakout stocks for today.<\/p>\n In order to select the right breakout stock, one has first to calculate its support and resistance level. A support level is the lower bound for stock movements, while a resistance level refers to the maximum price it trades within a considerable period.<\/p>\n In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. At the resistance level, most traders are willing to go long on the stock, meaning they would like to add them to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.<\/p>\n The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.<\/p>\n For a bona fide breakout, the stock\u2019s earlier resistance barrier should become its new support level. This only happens if the trading channel that has been established is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive at first glance.<\/p>\n \u2022 Percentage price change over four weeks between 10% and 20%<\/strong> (Stocks showing considerable price increases but whose gains are not excessive.)<\/p>\n \u2022 Current Price \/52-Week High greater than or equal to 0.9<\/strong> (Stocks trading 90% close to their 52-week highs.)<\/p>\n \u2022 Zacks Rank less than or equal to #2<\/strong> (Only Strong Buy and Buy rated stocks can get through.)<\/p>\n No matter whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven history of outperformance.<\/p>\n \u2022 Beta for 60 months less than or equal to 2<\/strong><\/p>\n (Stocks that move by a greater degree than the broader market but within a reasonable limit.)<\/p>\n \u2022 Current price less than or equal to $20<\/strong> (Stocks reasonably priced.)<\/p>\n These criteria narrow down the universe of more than 6,853 stocks to only 12. Here are the top three stocks:<\/p>\n L.B. Foster<\/strong> is engaged in the manufacture, fabrication and distribution of rail and trackwork, piling, highway products and tubular products. L.B. Foster currently carries a Zacks Rank #2. FSTR has an expected earnings growth rate of 112.5% for the current year.<\/p>\n LSI Industries<\/strong> produces and sells non-residential lighting and retail display solutions. LSI Industries currently flaunts a Zacks Rank #1. LYTS has an expected earnings growth rate of 27.3% for the current year.<\/p>\n OppFi<\/strong> provides a financial technology platform that powers banks to help everyday consumers gain access to credit. OppFi currently has a Zacks Rank #1. OPFI has an expected earnings growth rate of 533.3% for the current year. LSI Industries Inc. (LYTS): Free Stock Analysis Report<\/p>\n OppFi Inc. (OPFI): Free Stock Analysis Report<\/p>\n To read this article on Zacks.com click here.<\/p>\n Zacks Investment Research<\/p>\n This article originally appeared on Zacks<\/i><\/p>\n Sponsored: Tips for Investing<\/b><\/p>\n A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.<\/p>\n Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses,\tconsider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.<\/p>\nZeroing in on Breakout Stocks<\/h3>\n
Has a Genuine Breakout Occurred?<\/h3>\n
Screening Criteria<\/h3>\n
\nL.B. Foster Company (FSTR): Free Stock Analysis Report<\/p>\n