Why Xerox Holdings Corporation XRX May Be an Excellent Choice for Momentum Investors

The practice of momentum investing is about capitalizing on existing market trends. 'Buying high and selling higher' epitomizes momentum investing, where investors ride the wave of a stock's current trend. The key to this strategy is detecting and following a stock's price trajectory, as a set trend typically suggests a continued direction, leading to potentially profitable trades.

Defining Momentum for Investments

Identifying momentum in stocks can be challenging, as the metrics to measure them are widely debated. However, tools such as the Zacks Momentum Style Score offer a solution by providing an assessment of the momentum based on various factors, including price changes and earnings estimate revisions.

Exploring XRX as a Momentum Contender

Considering XRX's current situation, it holds an A rating for Momentum Style Score. Supporting this view, XRX has demonstrated a positive short-term price change of 0.19% over a week, aligning with the performance of the Zacks Office Supplies industry. An even more promising indicator is XRX's price change over the last month and quarter, showing increases of 0.76% and 9.28% respectively—a favorable comparison to industry and market benchmarks.

Looking further back to the previous year, XRX has seen a commendable price rise of 19.21%, outperforming the S&P 500's progress. Volume analysis also paints a bullish picture, with an average trading volume of 2,502,842 in the past 20 days, suggesting a strong market interest in XRX.

Earnings Estimates Adding to the Momentum

Another essential aspect of momentum is earnings potential. Positive estimate revisions often reflect a rosy outlook, contributing to a stock's momentum credentials. Notably, XRX's full-year earnings estimates have seen an uptick, with 1 analyst revising estimates upward in the past 60 days, raising the consensus from $1.65 to $1.70. Similarly, expectations for the next fiscal year are optimistic, with upward revisions unchallenged by negatives.

The Takeaway

Considering the evidence, XRX's Zacks Rank #2 (Buy) and excellent Momentum Score suggest it could be a solid pick for momentum investors. Xerox Holdings Corporation’s performance in both the short and long term, allied with favorable earnings revisions, underscores its potential for upward momentum.

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