The Indicator That Identifies Big Winners Before They Move Even Higher

“Trading is just too difficult for me.”

That’s what one of my acquaintances recently admitted about his experience in the market. When I asked him why he found it so hard, he told me, “I just never seem to pick the right stocks.”

He’s not alone. Most investors are very bad at picking stocks. From 1992 to 2012, the average individual investor generated annualized returns of 2.1%.

The stock selection process can, however, be made easier with the right tools.

There are about 14,060 stocks that trade on U.S. exchanges. That’s too many stocks for an investment research firm, much less an individual investor, to wade through in search of trading candidates.

That’s where indicators come into play. A good indicator can filter down the stock universe to just a handful that are more likely to outperform the market.

A good indicator, for example, can be used to filter down your potential investments to ones with the best odds of moving higher.

One of the best-performing indicators I’ve seen is called the Alpha Score, which was developed to find stocks on the verge of making a significant move higher. And it works. It has pinpointed stocks before they jump 20% in two weeks, 83% in a month and even 118% in three months.

Of course, not every stock it tags as a “buy” moves that high, that fast. But it has spotted many of the best-performing stocks of the year. In fact, it spotted eight of the 50 biggest winners of 2014 at some point in their run. And the average gain in these stocks was a remarkable 109%.

Today, I’m going to tell you about one of the stocks identified by this indicator as having the potential to be one of the best performers in the year to come, and that stock is Methode Electronics (NYSE: MEI).

Methode is a maker of specialty electronic components found primarily in the automotive industry. In early September, Methode proved to Wall Street that business has been very good, as the company handily beat revenue and earnings per share (EPS) forecasts during its fiscal first quarter. Methode doubled down on the good news by also raising its full-year EPS guidance.

During fiscal Q1, MEI reported EPS of $0.55, a 53% increase over the same quarter the prior year. Analysts were only forecasting EPS of $0.40. Revenue wise, Methode came in with a 30% year-over-year increase to $218.1 million. Estimates for the top line called for just $193.7 million in revenue.

The strong fiscal metrics for MEI, both in Q1 and in previous quarters, have not been overlooked by investors. In fact, over the past six months, the shares have soared some 27%, which in terms of price performance has earned MEI shares a relative strength (RS) of 90.

The RS rank of 90 means that MEI shares have outpaced 90% of all other publicly traded companies during the past six months. More importantly, the RS rank is one of the key components of the indicator I’ve been praising so highly.

The RS rank is then added to another ranking system that assesses a stock’s fundamental fitness when compared to all other publicly traded stocks.

The result is an indicator called the Alpha Score, and it is the key to finding those outstanding winners before they make their big runs higher.

While MEI is a fantastic company firing on all cylinders in terms of its share price performance and its fundamental metrics, it is just one of many companies with a remarkably high Alpha Score.

MEI is also one of the companies we’ve identified in a new report that features the 10 stocks with high Alpha Scores that are likely to be some of the market’s biggest winners over the next 12 months.

If you want to learn more about the Alpha Score and those 10 stocks flashing a clear “buy” signal right now, then I invite you to read a new report just published by Profitable Trading. To get access to this FREE report, click here now.