Applied Digital Corporation (APLD): A Promising Momentum Stock for Investors

Momentum investing focuses on following the recent trends of a stock's price movements, whether they are rising or falling. Investors buying stocks in a long position aim to purchase at a high price with the hope of selling at an even higher price later. This strategy relies heavily on identifying and capitalizing on ongoing price trends, as stocks that have established a specific directional course are likely to continue along that path. The primary aim is to make trades that are timely and beneficial based on these movements.

Although momentum is a widely recognized stock characteristic, defining it can be quite challenging. Discussions about the best metrics to assess momentum can be extensive. However, the Zacks Momentum Style Score, a component of Zacks' Style Scores, helps clarify some of these complexities.

In this article, we will explore Applied Digital Corporation (APLD), which currently holds a Momentum Style Score of B. We will also examine some key factors contributing to this Score, including price changes and earnings estimate revisions.

Furthermore, it is crucial to understand that Style Scores complement the Zacks Rank, a stock rating system known for its robust record of effectiveness. At present, Applied Digital Corporation is assigned a Zacks Rank of #2 (Buy). Our analysis indicates that stocks rated either Zacks Rank #1 (Strong Buy) or #2 (Buy) with Style Scores of A or B tend to outperform the market in the following month.

Is APLD Set to Outperform the Market?

Let’s evaluate some elements of the Momentum Style Score attributed to APLD that indicate its potential as a solid momentum stock.

Examining short-term price movements can be an effective way to determine a stock's momentum, reflecting current investor interest and the balance of buying versus selling pressure. Additionally, comparing the performance of a stock to its industry can help identify the top players within that sector.

For APLD, the stock has increased by 2.54% in the past week, contrasting with a modest 0.2% gain in the Zacks Financial - Miscellaneous Services industry during the same time frame. The longer-term performance also shows promise, with APLD experiencing a price hike of 28.88% over the past month, compared to an industry growth of just 0.97%.

While a stock may experience price increases, consistently outperforming the market is crucial. Therefore, looking at longer-term data is important; Applied Digital Corporation shares have risen 66.78% in the past three months and 78.33% over the last year. In comparison, the S&P 500 has gained only 10.75% and 34.53% in the same periods.

Investors should also monitor APLD's average trading volume over a 20-day period. Volume can provide useful insights; a rising stock accompanied by above-average volume typically signals bullish trends, while declining stocks with high volume often indicate bearish conditions. Currently, APLD averages 16,689,773 shares traded over the last 20 days.

Examining Earnings Projections

The Zacks Momentum Style Score comprises various components, including stock price movements and estimate revisions. Earnings estimates significantly influence the Zacks Rank, and positive revisions can signal potential momentum. Recently, we have observed encouraging trends with APLD.

In the past two months, four earnings estimates for APLD have been revised upward, with none moving lower for the entire year. This has raised the consensus estimate from -$1.12 to -$0.40 over the previous 60 days. For the next fiscal year, one estimate has increased, while no downward adjustments have occurred.

The Final Verdict

Considering all these aspects, it's no surprise that APLD holds a #2 (Buy) rating and possesses a Momentum Score of B. If you're on the lookout for a potential new investment poised for growth in the near term, Applied Digital Corporation should certainly be on your radar.

investment, stocks, momentum