As 2026 gets underway, astute investors should apply Richard Driehaus’ famous “buy high and sell higher” theory to identify stocks with further upside potential. This is because the investment approach aims to capture the strongest momentum players, and it helped Richard Driehaus earn a place on Barron’s All-Century Team.
Using this strategy, stocks like Kinross Gold Corporation KGC and Willdan Group, Inc. WLDN stand out as momentum picks, with shares that have already soared 203.8% and 172.2%, respectively, last year, highlighting their powerful upward trends.
A Detailed Look Into the Driehaus Strategy
Regarding the strategy, Driehaus once said, “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in decline and try to guess when it will turn around.” In line with this insight, the American Association of Individual Investors (“AAII”) considered the 50-day moving average as one of the key criteria before creating a portfolio following Driehaus’ philosophy.
It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator — positive relative strength — has also been included in this strategy. A positive 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.
Moreover, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was made to provide better returns over the long term.
Screening Parameters Using Research Wizard:
To make the strategy more profitable, we have considered only those stocks that have a Zacks Rank #1 (Strong Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
• Zacks Rank equal to #1
Whether the market is good or bad, stocks with a Zacks Rank #1 have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
• Last 5-year average EPS growth rates above 2%
Strong EPS growth history ensures an improving business
• Trailing 12-month EPS growth greater than 0 and industry median
Higher EPS growth compared to the industry average indicates superior earnings performance
• Last four-quarter average EPS surprise greater than 5%
Solid EPS surprise history indicates better price performance
• Positive percentage change in 50-day moving average and relative strength over 4 weeks
Positive percentage change in the 50-day moving average and the relative strength signal uptrend
• Momentum Score equal to or less than B
A favorable momentum score indicates that it is ideal for taking advantage of the momentum with the highest probability of success.
These few parameters have narrowed the universe of more than 7,743 stocks to only 13.
Here are two of the 13 stocks:
Kinross Gold
Kinross Gold explores and develops gold properties in the United States, Brazil, Chile, Canada and Mauritania. A steady rise in gold prices is expected to boost Kinross Gold’s profitability, while strong cash flows will support debt repayment. It has a Momentum Score of A. The trailing four-quarter earnings surprise for KGC is 17.4%, on average.
Willdan Group
Willdan Group provides professional and consulting services mainly in the United States. The company’s AI-focused infrastructure acquisitions are set to drive higher profits. It has a Momentum Score of B. The trailing four-quarter earnings surprise for WLDN is 58.1%, on average.
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Kinross Gold Corporation (KGC): Free Stock Analysis Report Willdan Group, Inc. (WLDN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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