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5 Must-Buy Momentum Stocks for December to Tap Market Rally

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Wall Street regained its momentum in November after two consecutive months of slowdown and the pace is likely to continue in the last month of the pandemic-ridden 2020.

On Dec 1, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — gained 0.6%, 1.1% and 1.3%, respectively. During intraday trading, the Dow posted a new all-time high. The S&P 500 and the Nasdaq Composite recorded fresh all-time and closing highs.

At this stage, it will be prudent to invest in Zacks top-ranked momentum stocks that have surged in the past three months, to tap the market's rally.

Momentum Likely to Continue Despite Pandemic

Momentum investing calls for a continued appraisal of stocks, ensuring that an investor does not pick a beaten-down name or overlook a thriving one. Momentum investors buy high on the anticipation that a stock will only ascend in the short to intermediate term.

Although coronavirus-induced woes are persisting in the United States, causing occasional market fluctuations, the overall movement of Wall Street is likely to remain northbound.

At least three potential vaccine candidates for COVID-19  have been backed by impressive late-stage clinical trial data and are lined up for emergency authorization from the FDA. The availability of a vaccine in the near future will be a game changer in 2021.

Since the lockdowns that were imposed in March, the U.S. economy is operating at a significant sub-optimal level. The gradual reopening process, which was started in May-June, was jeopardized in late September as the resurgence of coronavirus forced several state administrations to impose fresh restrictions.

Hopes for More Stimulus

On Dec 1, a bipartisan group of lawmakers proposed a $908 billion fresh coronavirus-aid package. Major components include $160 billion for state, local and tribal governments, $180 billion for additional unemployment insurance and $288 billion as support to small businesses including Paycheck Protection Program.

Treasury Secretary Steven Mnuchin and house Speaker Nancy Pelosi are likely to restart telephonic discussion to find out a compromising formula for a new tranche of fiscal aid.

The first round of fiscal stimulus — known as the CARES Act — ended in July. On Nov 30, Fed Chairman Jerome Powell emphasized the importance of the continuation of lending programs that the central bank has deployed to endure the pandemic.

Our Top Picks

We have narrowed down our search to five momentum stocks that have popped in past three months. All these stocks witnessed robust earnings estimate revisions in the last 7 to 30 days and have strong growth potential. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Momentum Score of A.  You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past three months.

 

Ubiquiti Inc. (UI - Free Report) offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. The company has an expected earnings growth rate of 33.3% for the current year (ending June 2021). The Zacks Consensus Estimate for current-year earnings has improved by 25.1% over the last 30 days. The stock price has soared 52.6% in the past three months.

L Brands Inc. (LB - Free Report) operates as a specialty retailer of women's intimate and other apparel, personal care, and beauty and home fragrance products. It operates in three segments: Victoria's Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International.

The company has an expected earnings growth rate of 0.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 81.1% over the last 30 days. The stock price has jumped 31.3% in the past three months.

Williams-Sonoma Inc. (WSM - Free Report) is a multi-channel specialty retailer of premium quality home products. The company has an expected earnings growth rate of 65.5% for the current year (ending January 2021). The Zacks Consensus Estimate for current-year earnings has improved by 25.5% over the last 30 days. The stock price has climbed 29.2% in the past three months.

Deere & Co. (DE - Free Report) manufactures and distributes farm equipment worldwide. The company operates through three segments: Agriculture and Turf, Construction and Forestry, and Financial Services.

The company has an expected earnings growth rate of 43.6% for the current year (ending October 2021). The Zacks Consensus Estimate for its current-year earnings has improved 15.2% over the last 7 days. The stock price has rallied 21% in the past three months.

Fair Isaac Corp. (FICO - Free Report) develops analytic, software, and data management products and services that enable businesses to automate, enhance and connect decisions in North America, Latin America, Europe, the Middle East, Africa and the Asia Pacific.

The company has an expected earnings growth rate of 9.9% for the current year (ending September 2021). The Zacks Consensus Estimate for current-year earnings has improved 0.51% over the last 30 days. The stock price has advanced 13.8% in the past three months.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>