Around this time last year I wrote “Three stocks with the most turnaround potential in 2016,” laying out my theses for beaten-down companies that would outperform the benchmark S&P 500 Index SPX, -0.23% in the subsequent 12 months. The three stocks I discussed were: Coach COH, -0.67% Urban Outfitters URBN, -0.79% and Stillwater Mining SWC, +1.06% They’re up 21%, 42% and 99%, respectively, so far this year. Every day I run a screen to find beleaguered stocks that I believe could outperform the market over the next 12 months. My own 20 years of trading experience tells me that buying a stock whose price has been falling is akin to “catching a falling knife,” as momentum tends to be a consistent factor that has outperformed value-based and passive strategies.
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