LivePerson Shows Fast-Paced Momentum But Is Still a Bargain Stock

Momentum investors typically don't time the market or "buy low and sell high." In other words, they avoid betting on cheap stocks and waiting long for them to recover. Instead, they believe that "buying high and selling higher" is the way to make far more money in lesser time.

Everyone likes betting on fast-moving trending stocks, but it isn't easy to determine the right entry point. These stocks often lose momentum when their future growth potential fails to justify their swelled-up valuation. In that phase, investors find themselves invested in shares that have limited to no upside or even a downside. So, betting on a stock just by looking at the traditional momentum parameters could be risky at times.

It could be safer to invest in bargain stocks that have been witnessing price momentum recently. While the Zacks Momentum Style Score, which pays close attention to trends in a stock's price or earnings, is pretty useful in identifying great momentum stocks, our 'Fast-Paced Momentum at a Bargain' screen comes handy in spotting fast-moving stocks that are still attractively priced.

LivePerson LPSN is one of the several great candidates that made it through the screen. While there are numerous reasons why this stock is a great choice, here are the most vital ones:

Investors' growing interest in a stock is reflected in its recent price increase. A price change of 33.8% over the past four weeks positions the stock of this customer-service technology company well in this regard.

While any stock can see a spike in price for a short period, it takes a real momentum player to deliver positive returns for a longer time frame. LPSN meets this criterion too, as the stock gained 58.5% over the past 12 weeks.

Moreover, the momentum for LPSN is fast paced, as the stock currently has a beta of 1.73. This indicates that the stock moves 73% higher than the market in either direction.

Given this price performance, it is no surprise that LPSN has a Momentum Score of A, which indicates that this is the right time to enter the stock to take advantage of the momentum with the highest probability of success.

In addition to a favorable Momentum Score, an upward trend in earnings estimate revisions has helped LPSN earn a Zacks Rank #2 (Buy). Our research shows that the momentum-effect is quite strong among Zacks Rank #1 and #2 stocks. That's because as covering analysts raise their earnings estimates for a stock, more and more investors take an interest in it, helping its price race to keep up.

Most importantly, despite possessing fast-paced momentum features, LPSN is trading at a reasonable valuation. In terms of Price-to-Sales ratio, which is considered as one of the best valuation metrics, the stock looks quite cheap now. LPSN is currently trading at 0.26 times its sales. In other words, investors need to pay only 26 cents for each dollar of sales.

So, LPSN appears to have plenty of room to run, and that too at a fast pace.

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