Nvidia (NVDA) Is Up 6.34% in One Week: What You Should Know

Momentum investing involves following a stock’s recent trend, which can go in either direction. In a “long context,” investors will “buy high, but hope to sell even higher.” And for investors who follow this methodology, it is essential to take advantage of trends in a stock’s price; Once a stock sets a course, it is more than likely to continue moving in that direction. The goal is that once a stock follows a fixed trajectory, it results in timely and profitable trades.

Although many investors like to look for stock momentum, it can be very difficult to define. There is much debate around which metrics are best to focus on and which are poor indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps us solve this problem.

Below we look at Nvidia $NVDA (NVDA)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. Nvidia currently has a Zacks Rank of #1 (Strong Buy). Our research shows that stocks with Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of “A or B” outperform the market over the following month.

You can see the current list of Zacks #1 Rank stocks here >>>

Ready to beat the market?

Let’s discuss some of the components of the Momentum Style Score for NVDA that show why this maker of graphics chips for gaming and artificial intelligence shows promise as a solid momentum pick.

A good momentum indicator for a stock is to look at its short-term price activity, as it can reflect both current interest and whether buyers or sellers currently have the upper hand. It’s also useful to compare a stock to its industry; this can show investors the best companies in a particular area.

For NVDA, shares are up 6.34% over the past week, while the Zacks Semiconductor – General industry is up 15.28% over the same period. The stock also looks pretty good over a longer time frame, as the monthly price change of 4.65% also compares favorably to the industry’s performance of 13.61%.

Considering longer-term price metrics, such as performance over the past three months or the past year, can also be beneficial. Actions of Nvidia rose 1.29% in the last quarter and 70.04% last year. In comparison, the S&P 500 moved only -1.82% and 31.04%, respectively.

Investors should also pay attention to NVDA’s 20-day average trading volume. Volume is a useful element in many ways, and the 20-day average establishes a good price/volume benchmark; a rising stock with above-average volume is usually a bullish sign, while a falling stock with above-average volume is usually a bearish sign. NVDA currently holds an average of 161,602,752 shares over the past 20 days.

Profit outlook

The Zacks Momentum Style Score encompasses many elements, including estimate revisions and changes in a stock’s price. Investors should note that earnings estimates are also important to the Zacks Rank, and a good run here can be promising. We recently noticed this with NVDA.

Over the past two months, 15 earnings estimates have increased, while none have declined for the full year. These revisions helped increase NVDA’s consensus estimate from $7.36 to $8.03 over the past 60 days. Looking ahead to the next financial year, 7 estimates have increased while there have been no downward revisions during the same period.

Conclusion

Given these factors, it should come as no surprise that NVDA is a #1 Stock (Strong Buy) and sports a Momentum Score of A. If you’re looking for a new pick that’s expected to skyrocket in the near term, be sure to keep Nvidia on your short list.

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This article was originally published on Zacks Investment Research (zacks.com).

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