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Find Great Momentum Stocks to Buy as the Market Rips Higher
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The S&P 500 and the Nasdaq keep hitting new 52-week highs as we pass the halfway point of July. The upward momentum kicked into high gear following the release of cooler-than-projected June inflation data and an upbeat start to the second-quarter earnings season.
The benchmark has now climbed around 5% over the last two years, with the tech-heavy index on the cusp of turning green—down around -0.4%. Over the past three years, the S&P 500 and the Nasdaq have surged 40% and 33%, respectively.
The market is riding high to start the second quarter and it is thankfully not just tech stocks driving the charge anymore. In fact, all 11 S&P 500 sectors climbed in June, and eight sectors are up over the last month, with Consumer Staples, Health Care, and Utilities barely in the red.
Image Source: Zacks Investment Research
Wall Street is betting that the Fed is all but done after Jay Powell and Co. hike by 0.25% at their July FOMC meeting next week. Unless the Fed does or says something to signal more hawkishness, the market will likely be able to breathe easy and focus nearly entirely on earnings, which have come in strong so far.
The big banks and some other early reports showcased a “A Good Start So Far” to Q2 earnings season, according to our Director of Research Sheraz Mian. Stock prices seem to be signaling to investors that the second quarter will market the bottom for earnings.
Given this backdrop, the market might be ready to keep soaring to close out July and beyond. The screen we explore today helps investors find Zacks Rank #1 (Strong Buy) stocks that also boast strong upward price momentum and solid value.
Screen Basics
The screen we are looking at today comes loaded with the Research Wizard. The screen helps investors dig through all of the Zacks Rank #1 (Strong Buy) stocks, of which there are over 200 at any given time, to find some of the top momentum names.
The screen narrows down the list of Zacks Rank #1 (Strong Buy) stocksto those with upward price momentum that are also trading within 20% of their 52-week highs. The screen then uses the PEG ratio and the Price to Sales ratio to help make sure investors are getting value as well. The screen then makes your life a little easier and narrows it down to just seven stock picks.
The screen basics are listed below…
· Zacks Rank = #1 (Strong Buy)
· Current Price/52-week High >= 0.8
· PEG Ratio: P/E F(1)/EPS Growth <= 1
· Price/Sales <= 3
· Percentage Change Price -12 Weeks = Top # 7
This strategy comes loaded with the Research Wizard and it is called bt_sow_momentum_method1.It can be found in the SoW (Screen of the Week) folder.
The screen is pretty simple, yet powerful. Here are two of the seven stocks that made it through this week's screen…
Toll Brothers is a diversified luxury home builder that operates its own architectural, engineering, mortgage, title, and land development subsidiaries, as well as other offerings that fit into its high-end offerings. TOL also operates its own lumber distribution, house component assembly, manufacturing segments, and more.
TOL builds in roughly half of U.S. states and over 60 markets from Arizona and California to New York and North Carolina. Despite being in the luxury market, Toll Brothers caters to nearly every aspect of the market, including first-time, move-up, empty-nester, active-adult, and second-home buyers. Toll Brothers, like many players in its space, suffered a wave of downward earnings revisions after the Covid boom ended and mortgage rates soared.
Image Source: Zacks Investment Research
Despite higher rates and a slowing economy, U.S. housing starts are rebounding and TOL’s earnings revisions have roared back in a huge way since its last earnings report. Toll Brothers’ FY23 consensus EPS estimate has jumped 23% and its FY24 figure surged 30%. Toll Brothers is benefitting from long-term demographic trends and the ongoing undersupply of single-family homes that has kept demand high, with buyers realizing mortgage rates aren’t likely to fall back down the Covid levels again unless something awful happens to the economy. Plus, Toll Brothers and other homebuilders didn’t overbuild during the Covid boom.
Toll Brothers is part of the Zacks Building Products - Home Builders industry that is in the top 8% of over 250 Zacks industries. TOL stock has soared 70% in the last 12 months and it hit new highs on Tuesday. Toll Brothers stock has climbed 140% in the last three years vs. the S&P 500’s 40%. Despite climbing 145% in the last decade and trading at fresh records, TOL trades 20% below its own 10-year median at 7.9X forward earnings and 70% below its own highs.
Vertiv provides critical digital infrastructure and continuity solutions from the cloud to the edge of the network. The firm aims to help its clients deal with critical issues facing data centers, communication networks, and commercial and industrial facilities through its portfolio of power, cooling, and IT infrastructure solutions and services. Vertiv topped our Q1 earnings and revenues estimates, crushing earnings by 42%.
Vertiv’s improved earnings outlook helps it land a Zacks Rank #1 (Strong Buy), with both its FY23 and FY24 consensus estimates up 10% since its report. On top of that, VRT’s most accurate/most recent EPS estimate for fiscal 2024 comes in 9% above consensus. Zacks estimates call for VRT’s revenue to climb 15% this year and 6% in 2024 to help boost its adjusted earnings by 136% and 19%, respectively.
Image Source: Zacks Investment Research
Vertiv stock has soared 170% in the last five years to blow away the Zacks tech sector’s 85% run. VRT shares have been part of that wave of tech winners in 2023 as well, including a 95% climb since its beat-raise report in late April. VRT is trading right around its highs at roughly $27 per share. Yet its forward earnings multiple of 19.1X showcases impressive value since it marks a 20% discount vs. its own highs and 25% vs. the Zacks Tech sector.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
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.
Image: Bigstock
Find Great Momentum Stocks to Buy as the Market Rips Higher
The S&P 500 and the Nasdaq keep hitting new 52-week highs as we pass the halfway point of July. The upward momentum kicked into high gear following the release of cooler-than-projected June inflation data and an upbeat start to the second-quarter earnings season.
The benchmark has now climbed around 5% over the last two years, with the tech-heavy index on the cusp of turning green—down around -0.4%. Over the past three years, the S&P 500 and the Nasdaq have surged 40% and 33%, respectively.
The market is riding high to start the second quarter and it is thankfully not just tech stocks driving the charge anymore. In fact, all 11 S&P 500 sectors climbed in June, and eight sectors are up over the last month, with Consumer Staples, Health Care, and Utilities barely in the red.
Image Source: Zacks Investment Research
Wall Street is betting that the Fed is all but done after Jay Powell and Co. hike by 0.25% at their July FOMC meeting next week. Unless the Fed does or says something to signal more hawkishness, the market will likely be able to breathe easy and focus nearly entirely on earnings, which have come in strong so far.
The big banks and some other early reports showcased a “A Good Start So Far” to Q2 earnings season, according to our Director of Research Sheraz Mian. Stock prices seem to be signaling to investors that the second quarter will market the bottom for earnings.
Given this backdrop, the market might be ready to keep soaring to close out July and beyond. The screen we explore today helps investors find Zacks Rank #1 (Strong Buy) stocks that also boast strong upward price momentum and solid value.
Screen Basics
The screen we are looking at today comes loaded with the Research Wizard. The screen helps investors dig through all of the Zacks Rank #1 (Strong Buy) stocks, of which there are over 200 at any given time, to find some of the top momentum names.
The screen narrows down the list of Zacks Rank #1 (Strong Buy) stocksto those with upward price momentum that are also trading within 20% of their 52-week highs. The screen then uses the PEG ratio and the Price to Sales ratio to help make sure investors are getting value as well. The screen then makes your life a little easier and narrows it down to just seven stock picks.
The screen basics are listed below…
· Zacks Rank = #1 (Strong Buy)
· Current Price/52-week High >= 0.8
· PEG Ratio: P/E F(1)/EPS Growth <= 1
· Price/Sales <= 3
· Percentage Change Price -12 Weeks = Top # 7
This strategy comes loaded with the Research Wizard and it is called bt_sow_momentum_method1. It can be found in the SoW (Screen of the Week) folder.
The screen is pretty simple, yet powerful. Here are two of the seven stocks that made it through this week's screen…
Toll Brothers, Inc. ((TOL - Free Report) )
Toll Brothers is a diversified luxury home builder that operates its own architectural, engineering, mortgage, title, and land development subsidiaries, as well as other offerings that fit into its high-end offerings. TOL also operates its own lumber distribution, house component assembly, manufacturing segments, and more.
TOL builds in roughly half of U.S. states and over 60 markets from Arizona and California to New York and North Carolina. Despite being in the luxury market, Toll Brothers caters to nearly every aspect of the market, including first-time, move-up, empty-nester, active-adult, and second-home buyers. Toll Brothers, like many players in its space, suffered a wave of downward earnings revisions after the Covid boom ended and mortgage rates soared.
Image Source: Zacks Investment Research
Despite higher rates and a slowing economy, U.S. housing starts are rebounding and TOL’s earnings revisions have roared back in a huge way since its last earnings report. Toll Brothers’ FY23 consensus EPS estimate has jumped 23% and its FY24 figure surged 30%. Toll Brothers is benefitting from long-term demographic trends and the ongoing undersupply of single-family homes that has kept demand high, with buyers realizing mortgage rates aren’t likely to fall back down the Covid levels again unless something awful happens to the economy. Plus, Toll Brothers and other homebuilders didn’t overbuild during the Covid boom.
Toll Brothers is part of the Zacks Building Products - Home Builders industry that is in the top 8% of over 250 Zacks industries. TOL stock has soared 70% in the last 12 months and it hit new highs on Tuesday. Toll Brothers stock has climbed 140% in the last three years vs. the S&P 500’s 40%. Despite climbing 145% in the last decade and trading at fresh records, TOL trades 20% below its own 10-year median at 7.9X forward earnings and 70% below its own highs.
Vertiv Holdings Co ((VRT - Free Report) )
Vertiv provides critical digital infrastructure and continuity solutions from the cloud to the edge of the network. The firm aims to help its clients deal with critical issues facing data centers, communication networks, and commercial and industrial facilities through its portfolio of power, cooling, and IT infrastructure solutions and services. Vertiv topped our Q1 earnings and revenues estimates, crushing earnings by 42%.
Vertiv’s improved earnings outlook helps it land a Zacks Rank #1 (Strong Buy), with both its FY23 and FY24 consensus estimates up 10% since its report. On top of that, VRT’s most accurate/most recent EPS estimate for fiscal 2024 comes in 9% above consensus. Zacks estimates call for VRT’s revenue to climb 15% this year and 6% in 2024 to help boost its adjusted earnings by 136% and 19%, respectively.
Image Source: Zacks Investment Research
Vertiv stock has soared 170% in the last five years to blow away the Zacks tech sector’s 85% run. VRT shares have been part of that wave of tech winners in 2023 as well, including a 95% climb since its beat-raise report in late April. VRT is trading right around its highs at roughly $27 per share. Yet its forward earnings multiple of 19.1X showcases impressive value since it marks a 20% discount vs. its own highs and 25% vs. the Zacks Tech sector.
Click here to sign up for a free trial to the Research Wizard today.
Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published.
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.
Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.