Up Over 50%: 3 Stocks on the Verge of a Massive Breakout in March

As March begins, investors might consider taking a more active role in selecting stocks by watching for potential breakout opportunities within specified price ranges. Under this approach, a stock should be sold if its price falls below the lower trading band, while a move above the upper band signals an opportunity to hold onto the stock and gain from further upward momentum. 

Using this method, Trevi Therapeutics, Inc. TRVI, Metalla Royalty & Streaming Ltd. MTA, and Vermilion Energy Inc. VET stand out as potential breakout stocks in March. All three have already posted strong gains over the past year, with Trevi Therapeutics, Metalla Royalty & Streaming and Vermilion Energy up 119.1%, 222.2% and 54.5%, respectively, indicating ongoing momentum. 

Zeroing in on Breakout Stocks 

To pick a breakout stock, calculate support and resistance levels. A support level is the lower bound for stock movements, while a resistance level refers to the maximum price it trades at within a considerable period. 

In other words, the demand for a stock is lowest at its support level, meaning most traders are willing to sell it. The majority of traders are willing to go long on the stock at the resistance level, indicating they would like to add it to their portfolios. 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. 

Has a Genuine Breakout Occurred? 

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. 

For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the established trading channel 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. 

Screening Criteria Using Research Wizard: 

• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases but whose gains are not excessive) 

• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.) 

• Zacks Rank less than or equal to #2 (Only Strong Buy and Buy-rated stocks can get through.) 

No matter whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have a proven track record of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here. 

• Beta for 60 months less than or equal to 2 

(Stocks that move more than the broader market but within a reasonable limit.) 

• Current price less than or equal to $20 (Stocks reasonably priced) 

These criteria narrow the universe of more than 6,853 stocks to only 7. Here are the top three stocks: 

Trevi Therapeutics 

Trevi Therapeutics operates as a clinical-stage biopharmaceutical firm. It has a Zacks Rank #2. TRVI’s expected earnings growth rate for the current year is 23.4%.

Metalla Royalty & Streaming 

Metalla Royalty & Streaming is a company focused on precious metals royalties and streaming. It has a Zacks Rank #2. MTA’s expected earnings growth rate for the current year is 100%.

Vermilion Energy  

Vermilion Energy explores, develops, and produces oil and natural gas across North America, Europe and Australia. It has a Zacks Rank #1. VET’s expected earnings growth rate for the current year is 268.4%.
 


 

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

Zacks Investment Research