Momentum investing is essentially an exception to the idea of ​​”buying low and selling high.” Investors who follow this investing style are typically not interested in betting on cheap stocks and waiting a long time for them to recover. Instead, they believe that “buying high and selling higher” is the way to make a lot more money in a shorter period of time.

Who doesn’t like to invest in fast-moving trend stocks? But determining the right time to enter is not easy. Often these stocks lose momentum when their valuation exceeds their future growth potential. In such a situation, investors have expensive stocks in their hands that offer little or no upside or even downside potential. Therefore, it can sometimes be risky to bet fully on momentum.

A safer approach might be to invest in cheap stocks with current price momentum. While the Zacks Momentum Style Score (part of the Zacks Style Scores system) helps identify great momentum stocks by closely monitoring trends in a stock’s price or earnings, our Fast Momentum at Bargain Prices screen is handy for spotting fast-moving stocks that are still attractively valued.

There are several stocks that are currently running through the filter and PRA Group (PRAA) is one of them. Here are the top reasons why this stock is a great candidate.

The growing interest of investors in a stock is reflected in its recent price increase. A price change of 2.6% in the last four weeks positions the stock of this debt collection company well in this regard.

While any stock can see a short-term price increase, it takes a true momentum player to deliver positive returns over a longer period of time. PRAA also meets this criteria, as the stock has gained 6.8% over the past 12 weeks.

Furthermore, momentum is high at PRAA as the stock currently has a beta of 1.48, meaning the stock has a 48% upside potential in either direction compared to the market.

Given this price action, it is no surprise that PRAA has a Momentum Score of B, indicating that this is the right time to enter the stock to take advantage of the momentum with the highest probability of success.

In addition to a favorable Momentum Score, an uptrend in earnings estimate revisions has helped PRAA earn a Zacks Rank #1 (Strong Buy). Our research shows that the momentum effect is quite strong at Zacks Ranks #1 and #2. This is because when analysts increase their earnings estimates for a stock, more investors become interested in it and its price race can keep up. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

The story continues

Most importantly, despite its rapid momentum, PRAA is trading at a reasonable price. Based on the price-to-sales ratio, which is considered one of the best valuation metrics, the stock currently looks quite cheap. PRAA is currently trading at 0.94 times its sales. In other words, investors only have to pay 94 cents for every dollar of sales.

PRAA seems to have plenty of room to develop, and at a rapid pace.

Besides PRAA, there are several other stocks that currently pass through our Fast-paced momentum at a bargain price filter. You can consider investing in these and look for the latest stocks that meet these criteria.

This isn’t the only screen that can help you find your next winning stock pick. Based on your personal investing style, you can choose from over 45 Zacks Premium screens that are strategically designed to beat the market.

However, remember that the key to a successful stock-picking strategy is to make sure it has a history of producing profitable results. You can do this easily with the help of the Zacks Research Wizard. The program not only allows you to test the effectiveness of your strategy, but also includes some of our most successful stock-picking strategies.

Click here to sign up for a free trial of Research Wizard today.

Want the latest recommendations from Zacks Investment Research? Download the 7 best stocks for the next 30 days today. Click here to get this free report

PRA Group, Inc. (PRAA): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research