Even with yesterday’s selling pressure early on there are plenty of stocks breaking out to new 52-week highs in this market. There is a repricing of risk taking place here and if you want to find the next breakout momentum stock you need to jump in.

Immediately following Election Day the market saw a huge rally that was concentrated in the Basic Materials, Industrial Goods, and Financial sectors of the market. These are traditionally lower P/E industries when compared to Energy, Tech and some of the other high-flying areas. When the initially rally happened, these P/E multiples expanded, pushing stocks in these sectors up over 10% in many cases.

What’s begun to unfold since the initial stages of the rally is stocks in the “high-flying” areas are getting in on the action. I believe this is a massive repricing of risk that is underway, relative to the lower P/Es of those core Trump rotation industries. The divergence we are seeing in the market this week, with the NASDAQ outperforming the large caps of the Dow on most days, is evident of that repricing. If you are out there looking for the next hot stock to swing trade, you need to look outside the Trump rotation industries.

Here I’ve put together a list of five hot momentum stocks that are breaking through to new 52-week highs while their earnings pictures are becoming increasingly bullish. What I mean by that is they are all at new highs and are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks. Stocks with favorable Zacks Ranks have seen earnings estimates push in a positive direction over the course of the last several weeks, meaning analysts have become increasingly bullish.

Array BioPharma (ARRY Quick QuoteARRY - Free Report)

Array BioPharma Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of small molecule drugs to treat patients with cancer in North America, Europe, and the Asia Pacific. The company’s drugs in Phase III clinical trials include Binimetinib, Encorafenib, and Selumetinib for the treatment of cancer, as well as ASC08/Danoprevir, a protease inhibitor for hepatitis C virus. 

Shares of ARRY have been breaking out since the good news started rolling in late September 2016. From there shares have gone from $3 to over $10. The breakout has been strong as investors have continued to pile in with very few retracements to the downside. An extended monthlong consolidation from late November through December is a precursor to the recent pop on through to new highs. I’d be buying this breakout on volume right here.

BHP Billition (BHP Quick QuoteBHP - Free Report)

BHP Billiton Limited discovers, acquires, develops, and markets natural resources worldwide. It operates through four segments: Petroleum, Copper, Iron Ore, and Coal. The company explores for, develops, produces, and markets oil and gas in the Gulf of Mexico, Western Australia, and Trinidad and Tobago. It also explores for copper, silver, lead, zinc, molybdenum, uranium, gold, iron ore, and metallurgical and thermal coal. 

BHP has been on a steady move higher since consolidating in the mid-$20s this summer. From there the march to $40 has seen a few shallow retracements. It looks like “Buy the dip” is the name of the game here. I’d wait to see the Commodity Channel Index (CCI) come down to oversold territory before entering a new long position on this one.

MSC Industrial Direct (MSM Quick QuoteMSM - Free Report)

MSC Industrial Direct Co., Inc., together with its subsidiaries, markets and distributes various ranges of metalworking and maintenance, repair, and operations (MRO) products primarily in the United States, Canada, and the United Kingdom. 

Shares of MSM skyrocketed higher immediately following the election. The stock went from $70 to $95 in a hurry, then bounced around in the low $90s before breaking out just over $100 during Wednesday’s trading. This sharp move higher has the CCI well over 200, indicating a very overbought position right now. I’d wait for a little bit of a cooldown before chasing this higher.

Rio Tinto (RIO Quick QuoteRIO - Free Report)

Rio Tinto plc, a mining and metals company, finds, mines, and processes mineral resources. The company mines and produces aluminum products, including bauxite, alumina, and aluminum; copper, gold, silver, and molybdenum, as well as nickel; diamonds, titanium dioxide feedstocks, borates, and salt, as well as high purity iron, metal powders, zircon, and rutile; uranium; iron ore; and thermal coal, and coking or metallurgical coal. 

The RIO chart follows a very similar pattern to BHP. There was an extended summertime consolidation followed by several hops higher in the fall. Now the stock is butting up against resistance at the 52-week high. This latest move is a breakout from a bottom near $38. I’d be looking to buy this breakout on volume in the near term.

Vantiv

Vantiv, Inc., through its subsidiary, Vantiv Holding, LLC, provides electronic payment processing services to merchants and financial institutions in the United States. It operates in two segments, Merchant Services and Financial Institution Services. 

Vantiv shares formed a long term, drawn out wedge pattern with a $60 top from July to mid-December, finally breaking out from $60 in the last couple of weeks. I’m looking to buy the breakout from $60 here. I believe the CCI will come down to the zero line and bounce, providing another entry for longs.

Bottom Line

When you’re looking for the next breakout stocks in this market, you don’t have to limit yourself to those stocks that are benefiting from the Trump trade. You can look outside this box to find where the market is repricing risk and re-inflating the next stocks to buy.

Where Do Zacks' Investment Ideas Come From?

You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>