Zacks.com featured highlights include Superior Group of Companies, AMC Global Media and Custom Truck One Source

3 Breakout Stocks Poised for Big Gains This August

Despite August being a volatile month for the stock market, U.S. stocks have begun the month strongly this year, even as day-to-day trading remained mixed. In this environment, investors should take a more active approach to stock selection, identifying companies with the potential to break out from defined trading ranges. 

Under this strategy, a stock should be sold if it falls below the lower end of its trading range, as this may signal further downside. Conversely, a move above the upper end of the range suggests strengthening momentum, a potential breakout, and an opportunity to capture additional gains. 

Using this framework, Superior Group of Companies, Inc., AMC Global Media Inc. and Custom Truck One Source, Inc. emerge as potential breakout stocks in August. 

Finding Breakout Stocks to Maximize Portfolio Returns

To pick a breakout stock, calculate support and resistance levels. A support level is the lower bound for price movement, while a resistance level is the maximum price it trades at over a considerable period.

In other words, the demand for a stock is lowest at its support level, meaning most traders are willing to sell it. The majority of traders are willing to go long the stock at the resistance level, suggesting they would like to add it to their portfolios. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above resistance. 

Has the Stock Confirmed a Breakout?

The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether. 

For a bona fide breakout, the stock's earlier resistance barrier should become its new support level. This only happens if the established trading channel is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive at first glance. 

Here are the top three stocks: 

Superior Group of Companies

Superior Group of Companies manufactures and sells branded uniforms, healthcare apparel, and promotional products worldwide. Superior Group of Companies has a Zacks Rank #2. SGC's expected earnings growth rate for the current year is 32.6%.

AMC Global Media 

AMC Global Media is an entertainment company that distributes content worldwide. AMC Global Media has a Zacks Rank #1. AMCX's expected earnings growth rate for the current year is 24.1%.

Custom Truck One Source 

Custom Truck One Source provides specialty equipment rental and sales solutions for infrastructure industries across the United States and Canada. Custom Truck One Source has a Zacks Rank #1. The company's expected earnings growth rate for the current year is 178.6% (read more: Micron & 2 Profitable Stocks Smart Investors Are Buying in August).

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/stock/news/2971433/3-breakout-stocks-poised-for-big-gains-this-august

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

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Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine.  But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has more than doubled the market from 1988 through 2016. Its average gain has been a stellar +25% per year. See these high-potential stocks free >>.

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Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

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