Why fast-moving Chefs’ Warehouse is a good choice for value investors

Momentum investors typically do not time the market or “buy low and sell high.” In other words, they avoid betting on cheap stocks and waiting a long time for them to recover. Instead, they believe that they can make a lot more money in a shorter period of time by “buying high and selling high.”

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.

It might be safer to invest in bargain stocks that have recently shown momentum in their price. While Zacks’ Momentum Style Score, which closely monitors a stock’s price or earnings trend, is quite useful for identifying great momentum stocks, our Fast Momentum at Bargain Price screen is handy for spotting fast-moving stocks that are still attractively valued.

Cooks’ camp (NASDAQ:CHEF) is one of the many great candidates that made it through the review. There are numerous reasons why this stock is a great choice, here are the main ones:

A hint of price momentum recently reflects the growing interest of investors in a stock. With a four-week price change of 2.6%, the stock of this specialty distribution company is certainly well positioned 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. CHEF also meets this criteria, as the stock has gained 6.4% over the past 12 weeks.

Furthermore, momentum is high for CHEF as the stock currently has a beta of 2.3, suggesting the stock has a 130% upside in either direction compared to the market.

Given this price action, it is no surprise that CHEF 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 CHEF earn a Zacks Rank #2 (Buy). Our research shows that the momentum effect is quite strong for Zacks Rank #1 and #2 stocks. That’s because when analysts increase their earnings estimates for a stock, more investors become interested in it, helping the price keep up.

Most importantly, despite its rapid momentum, CHEF 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. CHEF is currently trading at 0.43 times its sales. In other words, investors only have to pay 43 cents for every dollar of sales.

So it seems that CHEF has a lot of room to develop, and at a fast pace.

Besides CHEF, 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, keep in mind that the key to a successful stock selection strategy is to make sure it has produced profitable results in the past.

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