Why BBW's Momentum Should Continue to Grow

Understanding the Power of Trend Investing

When it comes to short-term investing or trading, one of the most commonly cited principles is that "the trend is your friend." This adage highlights the potential profitability of aligning with market movements. However, identifying and maintaining a sustainable trend can be challenging for many investors.

A key issue in trend investing is the risk of sudden reversals in stock price direction. These abrupt changes can lead to significant short-term losses if not properly managed. To mitigate this risk, investors must look beyond just price movements and consider underlying factors such as strong fundamentals, positive earnings estimates, and overall market sentiment.

For those seeking to capitalize on stocks that are currently showing momentum, there are tools available that can help identify promising opportunities. One such tool is the "Recent Price Strength" screen, which helps spot stocks that are in an uptrend and supported by solid fundamentals. These stocks often trade near the upper end of their 52-week high-low range, signaling potential bullishness.

Build-A-Bear (BBW): A Strong Candidate

One stock that has passed through this screen is Build-A-Bear (BBW). This toy retailer has shown consistent strength in its price movement over the past 12 weeks, with a gain of 23.2%. While a three-month price increase is a positive sign, it's also important to evaluate shorter time frames to ensure that the trend remains intact.

In the last four weeks, BBW has gained 1.3%, indicating that the upward trend is still active. Additionally, the stock is currently trading at 86.8% of its 52-week high-low range, suggesting it may be approaching a breakout point.

From a fundamental perspective, BBW carries a Zacks Rank #2 (Buy), placing it in the top 20% of more than 4,000 stocks ranked based on trends in earnings estimate revisions and EPS surprises. The Zacks Rank system evaluates stocks using four factors related to earnings estimates and classifies them into five categories, ranging from #1 (Strong Buy) to #5 (Strong Sell). Historically, Zacks Rank #1 stocks have delivered an average annual return of +25% since 1988.

Another indicator of BBW's strength is its Average Broker Recommendation of #1 (Strong Buy), reflecting the optimism of the brokerage community regarding the stock’s near-term performance.

Other Stocks and Tools for Investors

In addition to BBW, there are several other stocks that meet the criteria of the "Recent Price Strength" screen. Investors may consider these as potential opportunities to explore.

Beyond this specific screen, there are over 45 Zacks Premium Screens designed to help investors find winning stock picks based on different strategies. Each screen is tailored to cater to various investment styles, making it easier for individuals to align their choices with their personal goals.

However, the success of any stock-picking strategy depends on its historical performance. To evaluate this, investors can use the Zacks Research Wizard, a powerful tool that allows users to backtest their strategies and access some of the most successful stock-picking methods.

By leveraging these resources, investors can make more informed decisions and increase their chances of achieving profitable returns.