Volatility has returned in September 2026, a month that has traditionally been one of the weakest for the stock market, making it difficult for investors to identify stocks capable of delivering outsized gains. However, investors seeking exceptional returns should prioritize high-momentum stocks. To identify stocks with the potential for further upside, they can adopt Richard Driehaus’s celebrated “buy high and sell higher” strategy, which earned him a spot on Barron’s All-Century Team.
Based on the Driehaus momentum-investing approach, Dell Technologies Inc. DELL, KE Holdings Inc. BEKE and The Vita Coco Company, Inc. COCO have emerged as strong momentum stocks, offering attractive entry opportunities for investors now.
Inside the Driehaus Strategy: Identifying High-Momentum Stocks
Regarding the strategy, Driehaus once said: “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in decline and try to guess when it will turn around.” In line with this insight, the American Association of Individual Investors (“AAII”) considered the 50-day moving average one of the key criteria when creating a portfolio aligned with Driehaus’ philosophy.
It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator — positive relative strength — has also been included in this strategy. A positive percentage 50-day moving average indicates that the stock is trading above its 50-day moving average, signaling an uptrend.
Moreover, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. Companies with a strong history of beating estimates are also given importance in this strategy, which was designed to provide better returns over the long term.
Research Wizard’s Stock Screening Methodology
To make the strategy more profitable, we have considered only those stocks that have a Zacks Rank #1 (Strong Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1, offer the best upside potential.
• Zacks Rank equal to #1
No matter whether the market is good or bad, stocks with a Zacks Rank #1 have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.
• Last 5-year average EPS growth rates above 2%
Strong EPS growth history ensures an improving business
• Trailing 12-month EPS growth greater than 0 and industry median
Higher EPS growth compared to the industry average indicates superior earnings performance
• Last four-quarter average EPS surprise greater than 5%
Solid EPS surprise history indicates better price performance
• Positive percentage change in 50-day moving average and relative strength over 4 weeks
Positive percentage change in the 50-day moving average and the relative strength signal an uptrend
• Momentum Score equal to or less than B
A favorable momentum score indicates that capitalizing on the momentum is ideal and carries the highest probability of success.
These few parameters have narrowed the universe of more than 7,743 stocks to only 19.
Here are three of the 19 stocks:
Dell Technologies
Dell Technologies provides integrated technology products, solutions, and services across global markets. It has a Momentum Score of A. The trailing four-quarter earnings surprise for DELL is 29%, on average. The company’s expected earnings growth rate for the current year is 146% (read more: Dell Earnings Surge: Is It the Next Big AI Stock to Buy in 2026?).
KE Holdings
KE Holdings operates an integrated online and offline housing transaction and services platform in China. It has a Momentum Score of A. The trailing four-quarter earnings surprise for BEKE is 9.2%, on average. The company’s expected earnings growth rate for the current year is 74.2%.
The Vita Coco Company
The Vita Coco Company develops, markets, and distributes coconut water products under the Vita Coco brand worldwide. It has a Momentum Score of A. The trailing four-quarter earnings surprise for COCO is 21.9%, on average. The company’s expected earnings growth rate for the current year is 64.7%.
Why Haven’t You Looked at Zacks’ Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P’s +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Dell Technologies Inc. (DELL) : Free Stock Analysis Report
Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report
KE Holdings Inc. Sponsored ADR (BEKE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
