Exploring Applied Digital Corporation (APLD) as a Momentum Stock: A Potential Buy?

Momentum investing focuses on the trends of stocks, following their recent price movements. Investors often aim to buy high, anticipating even higher prices in the future. Key to this approach is recognizing stock price trends; when a stock establishes a direction, it is likely to continue along that path, creating opportunities for timely trades.

While momentum is a popular concept in the investing world, defining it can be challenging. The discussion around which metrics best indicate momentum is ongoing, yet the Zacks Momentum Style Score provides a useful tool in this context.

Let’s delve into the details of Applied Digital Corporation (APLD - Free Report). Currently, this corporation holds a Momentum Style Score of B, which reflects some positive indicators in its recent performance. Important components of the Momentum Style Score include price changes and earnings estimate revisions.

It’s crucial to note that Style Scores complement the Zacks Rank, a ranking system known for its strong performance history. At present, Applied Digital Corporation is rated as #2 (Buy) according to the Zacks Rank. Historically, stocks with Zacks Rank #1 (Strong Buy) and #2 (Buy), paired with Style Scores of A or B, tend to perform better than the general market over the subsequent month.

Is APLD Ready to Outperform the Market?

Let’s explore the factors contributing to APLD’s Momentum Style Score and why it might be an attractive option for momentum investors.

Analyzing short-term price movements can provide insight into a stock's momentum, revealing current buyer and seller dynamics. Additionally, comparing a stock's performance to its industry can highlight leaders within specific sectors.

For APLD, shares have experienced a 2.54% rise over the past week, while the Zacks Financial - Miscellaneous Services industry has only seen a modest increase of 0.2%. Looking at a longer timeframe, APLD has demonstrated even more impressive gains, with a 28.88% increase over the past month compared to the industry's performance of just 0.97%.

While many stocks may rise, only a few consistently outperform the market. To identify such stocks, one should examine longer-term metrics as well. APLD has shown a 66.78% increase over the last quarter, and its gains of 78.33% over the past year significantly outpace the S&P 500’s moves of 10.75% and 34.53%, respectively.

It’s also prudent for investors to monitor APLD's average volume of trading over a 20-day period. This metric can indicate price-to-volume trends; typically, a stock rising on high volume is a positive signal, while a decline on high volume may signal the opposite. Currently, APLD averages 16,689,773 shares traded over the past 20 days.

Earnings Projections

The Zacks Momentum Style Score considers a range of factors, including estimate movements for earnings, which are instrumental in the Zacks Rank as well. Notably, APLD has seen encouraging revisions in earnings estimates lately.

Over the last two months, four earnings estimates for Applied Digital Corporation have been revised upward, while none were adjusted downward for the current fiscal year. These positive changes led to an increase in APLD's consensus estimate from -$1.12 to -$0.40 in just 60 days. For the next fiscal year, there was also one upward revision, with no downward adjustments.

Final Thoughts

Taking all these factors into consideration, it is clear why Applied Digital Corporation is rated as a #2 (Buy) stock with a Momentum Score of B. For those seeking a promising stock that has the potential to deliver near-term gains, Applied Digital Corporation should be on your radar.

stocks, momentum, investing