Tirthankar Chakraborty
4 min read
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%
