September 2026 has brought renewed volatility to markets, a period that historically has tested investors’ ability to spot stocks capable of delivering strong gains. In that environment, investors have been looking toward momentum strategies that favor companies already moving higher, with the goal of positioning for potential continuation rather than trying to pick bottoms.
According to a screen built around the principles popularized by investor Richard Driehaus—often summarized as “buy high and sell higher”—Dell Technologies, KE Holdings, and The Vita Coco Company have been highlighted as momentum candidates based on criteria tied to price trends and earnings performance.
Key takeaways
- Price move: The screening emphasizes stocks showing strength versus their 50-day moving average and positive relative strength over recent weeks.
- Catalyst: The approach leans on improving earnings momentum, including recent earnings surprises and positive forward earnings growth expectations.
- Key implication: Investors using this framework may focus on names exhibiting both technical uptrends and improving fundamentals, particularly as September volatility complicates broader market selection.
- Selection constraint: The universe is narrowed using a combination of earnings metrics and momentum scores, reducing the number of qualifying stocks.
How the Driehaus-style momentum screen works
The Driehaus approach centers on favoring stocks that are already rising, rather than attempting to forecast a turnaround in a declining share price. According to the strategy, one key technical benchmark is the relationship between a stock’s current price level and its 50-day moving average.
Data treatment in the screen describes a calculation that compares the month-end price to the 50-day moving average of month-end price. A positive reading indicates the stock is trading above its 50-day moving average, signaling an uptrend. The strategy also incorporates “positive relative strength,” designed to capture stocks outperforming over a short window.
On the fundamentals side, the screen prioritizes earnings growth and expectations. It also emphasizes a record of companies beating estimates, reflecting Driehaus’s preference for businesses demonstrating improving earnings power alongside favorable price action.
Zacks methodology for narrowing the opportunity set
To translate the Driehaus concept into a more rules-based selection process, the report said it considered only stocks meeting specific Zacks criteria: a Zacks Rank of #1 (Strong Buy) and a Momentum Score of A or B. It also referenced the role of a Style Score of A or B in combination with the #1 rank to target what the methodology characterizes as strong upside potential.
According to the screening framework described, additional filters include:
- Last 5-year average EPS growth rates above 2%, intended to reflect improving business fundamentals.
- Trailing 12-month EPS growth greater than 0 and above the industry median, to capture earnings performance relative to peers.
- Last four-quarter average EPS surprise greater than 5%, aiming to identify companies with a recent history of exceeding expectations.
- Positive percentage change in the 50-day moving average and relative strength over four weeks, to confirm the presence of an uptrend.
- Momentum Score equal to or less than B, with the report framing this as consistent with capitalizing on momentum and maximizing the probability of success.
The screen described said these constraints narrowed a starting universe of more than 7,743 stocks to 19 qualifying candidates, from which three names were highlighted.
Three momentum candidates highlighted by the screen
Dell Technologies
Dell Technologies provides integrated technology products, solutions, and services across global markets. The report said Dell has a Momentum Score of A and cited a trailing four-quarter earnings surprise average of 29%. It also pointed to an expected earnings growth rate of 146% for the current year as part of the selection rationale.
KE Holdings
KE Holdings operates an integrated online and offline housing transaction and services platform in China. According to the report, KE Holdings has a Momentum Score of A, with a trailing four-quarter earnings surprise average of 9.2%. It also cited an expected earnings growth rate of 74.2% for the current year.
The Vita Coco Company
The Vita Coco Company develops, markets, and distributes coconut water products under the Vita Coco brand worldwide. The report said Vita Coco has a Momentum Score of A, with a trailing four-quarter earnings surprise average of 21.9%. It further cited expected earnings growth of 64.7% for the current year.
What investors may watch next
With September typically associated with weaker market performance and higher dispersion, investors using momentum frameworks may be monitoring whether strength versus the 50-day moving average persists alongside continued earnings execution. The next checkpoints implied by this type of approach are earnings updates for the highlighted companies and any updates that could affect forward earnings expectations—particularly if volatility accelerates into the next set of reporting windows.
