Fast-paced Momentum Stock Dream Finders Homes (DFH) Is Still Trading at a Bargain

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Momentum investing is essentially an exception to the idea of "buying low and selling high." Investors following this style of investing are usually not interested in betting on cheap stocks and waiting long for them to recover. Instead, they believe that "buying high and selling higher" is the way to make far more money in lesser time.

Who doesn't like betting on fast-moving trending stocks? But determining the right entry point isn't easy. Often, these stocks lose momentum once their valuation moves ahead of their future growth potential. In such a situation, investors find themselves loaded up on expensive shares with limited to no upside or even a downside. So, going all-in on momentum could be risky at times.

A safer approach could be investing in bargain stocks with recent price momentum. While the Zacks Momentum Style Score (part of the Zacks Style Scores system) helps identify great momentum stocks by paying close attention to trends in a stock's price or earnings, our 'Fast-Paced Momentum at a Bargain' screen comes handy in spotting fast-moving stocks that are still attractively priced.

There are several stocks that currently pass through the screen and Dream Finders Homes Inc. (DFH) is one of them. Here are the key reasons why this stock is a great candidate.

Investors' growing interest in a stock is reflected in its recent price increase. A price change of 0.7% over the past four weeks positions the stock of this homebuilder well in this regard.

While any stock can see a spike in price for a short period, it takes a real momentum player to deliver positive returns for a longer time frame. DFH meets this criterion too, as the stock gained 12.1% over the past 12 weeks.

Moreover, the momentum for DFH is fast paced, as the stock currently has a beta of 1.93. This indicates that the stock moves 93% higher than the market in either direction.

Given this price performance, it is no surprise that DFH has a Momentum Score of A, which indicates that this is the right time to enter the stock to take advantage of the momentum with the highest probability of success.

In addition to a favorable Momentum Score, an upward trend in earnings estimate revisions has helped DFH earn a Zacks Rank #2 (Buy). Our research shows that the momentum-effect is quite strong among Zacks Rank #1 and #2 stocks. That's because as covering analysts raise their earnings estimates for a stock, more and more investors take an interest in it, helping its price race to keep up. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>