Momentum investing revolves around the idea of ​​following a stock’s recent trend in either direction. In the ‘long’ context, investors will essentially be ‘buying high, but hoping to sell even higher’. With this methodology, it is crucial to take advantage of trends in a stock’s price; Once a stock has set a price, it is more than likely that it will continue to move in that direction. The goal is that once a stock follows a set path, it will lead to timely and profitable trades.

While many investors like to look for momentum in stocks, it can be very difficult to define. There is a lot of debate about which metrics are best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps us address this issue.

Below we take a look CarGurus (CARG)a company that currently has a Momentum Style Score of B. We also talk about price changes and earnings estimate revisions, two of the most important 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. CarGurus currently has a Zacks Rank of #2 (Buy). Our research shows that stocks with a Zacks Rank of #1 (Strong Buy) and #2 (Buy) and Style Scores of A or B outperform the market over the trailing one-month period.

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

To see if CARG is a promising momentum pick, let’s examine some Momentum Style elements to see if this online car shopping platform holds up.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and whether buyers or sellers currently have the upper hand. It is also useful to compare a security to its sector, as this can help investors identify the top companies in a given area.

For CARG, shares have risen 2.38% over the past week, while the Zacks Automotive – Replacement Parts sector has fallen 2.28% over the same period. The shares also look quite good over a longer period of time, as the monthly price change of 11.81% also compares favorably to the industry’s performance of 9.92%.

It can also be beneficial to consider longer-term price data, such as performance over the past three months or the past year. Shares of CarGurus are up 23.56% over the past quarter and 68.89% over the past year. On the other hand, the S&P 500 is up only 6.44% and 32.19%, respectively.

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