Why Fast-paced Mover 8x8 (EGHT) Is a Great Choice for Value Investors

A new investment screen, "Fast-Paced Momentum at a Bargain," identifies rapidly appreciating stocks that remain attractively valued, aiming to mitigate typical momentum risks. 8x8 (EGHT) exemplifies this strategy, having surged 37.5% in four weeks and 73.3% in twelve weeks with a high beta of 1.54, earning a Zacks Momentum Score of 'A' and a Zacks Rank #1 (Strong Buy) due to positive earnings revisions. Notably, EGHT trades at a low 0.52 Price-to-Sales ratio, positioning it as a strong candidate for continued upside despite its recent gains.

Analysis

8x8, Inc. (EGHT) is identified as a strong investment candidate through a 'Fast-Paced Momentum at a Bargain' screening strategy, which combines strong price appreciation with an attractive valuation. The stock exhibits significant momentum, having gained 37.5% in the last four weeks and 73.3% over the past 12 weeks. This performance is supported by a Zacks Momentum Score of 'A'. Furthermore, the stock's high beta of 1.54 indicates it is 54% more volatile than the broader market, reinforcing its 'fast-paced' nature. The investment thesis is strengthened by fundamental indicators, including a Zacks Rank #1 (Strong Buy), which is attributed to upward revisions in analyst earnings estimates, suggesting a positive shift in fundamental outlook is driving investor interest. Critically, despite the rapid price increase, EGHT is presented as undervalued, trading at a Price-to-Sales (P/S) ratio of 0.52, implying investors pay 52 cents for each dollar of sales, which suggests potential for further upside.

Key Decisions for Investors

• Investors employing a Growth at a Reasonable Price (GARP) or momentum strategy should consider EGHT, as its combination of strong price performance and a low Price-to-Sales ratio of 0.52 aligns with the 'momentum at a bargain' thesis.
• Given the stock's high beta of 1.54, investors must be prepared for significant volatility and should size positions in EGHT according to their risk tolerance, as its price movements are expected to be more pronounced than the market average.
• The bullish case is contingent on continued positive earnings estimate revisions and price momentum; therefore, investors should closely monitor analyst consensus and technical indicators for any signs of trend reversal that could weaken the rationale for the position.