Wall Street suffered a bloody blow as the first month of this year turned out the worst performer since March 2020. Soaring inflation and expectation of a tougher-than-anticipated Fed have shaken market participants’ confidence. Nevertheless, U.S. stock markets recovered some lost ground in the last there trading sessions and started February on a positive note.

The overall trend of the market will remain northbound based on the strong fundamentals of the U.S. economy. Moreover, a likely end of the pandemic after this winter should be another positive. At this stage, it will be prudent to invest in stocks with a favorable Zacks Rank that have strong momentum for the near-term.  Five of them are — Exxon Mobil Corp. (XOM Quick QuoteXOM - Free Report) , Texas Instruments Inc. (TXN Quick QuoteTXN - Free Report) , J.B. Hunt Transport Services Inc. (JBHT Quick QuoteJBHT - Free Report) , Ameriprise Financial Inc. (AMP Quick QuoteAMP - Free Report) and Tractor Supply Co. (TSCO Quick QuoteTSCO - Free Report) .

Momentum investing calls for 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. In spite of occasional market fluctuations owing to a shift from ultra-dovish to a more hawkish Fed, the overall movement of Wall Street is likely to remain northbound due to the following reasons.

Robust U.S. Economy to Drive Stock Markets

In 2022, the biggest drivers of the U.S. stock markets should be the nation’s strong economic fundamentals. We expect the U.S. economy to become fully operational as the pandemic is expected to reach its peak this winter. Several major investment bankers and money managers have already started removing pandemic-related adjustments from their financial models.

The U.S. economy will get more upside from the government’s infrastructure spending. On Nov 15, President Joe Biden signed a bipartisan infrastructure bill of $550 billion in addition to the previously approved funds of $450 billion for five years. Total spending may go up to $1.2 trillion if the plan is extended to eight years.

The infrastructure development project will be a key catalyst for the U.S. stock markets in 2022. Various segments of the economy such as basic materials, industrials, utilities and telecommunications should benefit immensely with more job creation.

Moreover, the White House has put pressure on Congress to quickly pass legislation providing $52 billion to help computer chip manufacturers and ease the shortage of the components vital to many industries.

Strong GDP and Corporate Earnings

In the fourth quarter of 2021, the U.S. GDP climbed 6.9% compared with the consensus estimate of 5.4%. In 2021, U.S. GDP surged 5.7%, marking its best performance since 1984. The momentum is likely to continue as the average estimate of 2022 is currently at 3.5%.

Wall Street has seen solid fourth-quarter 2021 earnings results so far. Total earnings of the market’s benchmark the S&P 500 Index have skyrocketed in the two pandemic-ridden years of 2020 and 2021. Going forward this momentum is likely to continue too. At present, total earnings and revenues of the S&P 500 Index have been estimated at 9.6% and 7.7%, respectively for 2022 and 9.6% and 5.5%, respectively for 2023.

Our Top Picks

We have narrowed our search to five large-cap (market capital > $10 billion) momentum stocks that have solid upside left for 2022. These stocks have seen strong earnings estimate revisions within the last 30 days indicating that the market is expecting this companies to do good  business in the near term.  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.

Image Source: Zacks Investment Research

Exxon Mobil made multiple world-class oil discoveries at the Stabroek Block, located off the coast of Guyana. XOM has raised the estimate for discovered recoverable resources from the Stabroek Block to approximately 10 billion oil-equivalent barrels.

Exxon Mobile’s bellwether status and an optimal integrated capital structure, which have historically led to industry-leading returns make it a relatively lower-risk energy sector play. The integrated oil behemoth expects to reduce greenhouse gas emissions by 30% in its upstream business. By the same time, XOM expects to reduce flaring and methane emissions by 40%.

Exxon Mobil has an expected earnings growth rate of 27% for the current year. The Zacks Consensus Estimate for current-year earnings improved 6% over the last 7 days.

Texas Instruments is benefiting from growth in the personal electronics market owing to the coronavirus-led work-from-home trend. Additionally, solid momentum across the Analog segment owing to robust signal chain and power product lines, is benefiting the top line of TXN.  

The continued rebound in the automotive market is a tailwind for Texas Instruments. Solid growth in the industrial market is another positive for TXN. Strategic investments in new growth avenues and competitive advantages should also reap results in the long term. TXN’s portfolio of long-lived products and efficient manufacturing strategies are the other catalysts.

Texas Instruments has an expected earnings growth rate of 10.4% for the current year. The Zacks Consensus Estimate for current-year earnings improved 11.1% over the last 7 days.

J.B. Hunt Transport Services is benefiting from strong performances across all its segments. The Dedicated Contract Services unit of JBHT is being aided by fleet productivity improvement and a rise in average revenue producing trucks.

The Integrated Capacity Solutions unit J.B. Hunt of is gaining from a favorable customer freight mix, as well as higher contractual and spot rates. Additionally, increase in load count and revenue per load is supporting growth of the Truck segment.

J.B. Hunt has an expected earnings growth rate of 19.5% for the current year. The Zacks Consensus Estimate for current-year earnings improved 5.8% over the last 30 days.

Ameriprise Financial is a leading asset management company. AMP operates through five segments: Advice & Wealth Management, Asset Management, Annuities, Protection and Corporate & Other. The deal to buy BMO's EMEA asset management business will likely be earnings accretive for Ameriprise Financial. Given a solid balance sheet, AMP’s capital deployments seem sustainable.

Ameriprise Financial is likely to accelerate top-line growth, given its robust asset balances, a diversified investment portfolio and business-restructuring initiatives (including the sale of the Auto & Home division, and the launch of banking and credit products).

Ameriprise Financial has an expected earnings growth rate of 11.8% for the current year. The Zacks Consensus Estimate for current-year earnings improved 4.6% over the last 7 days.

Tractor Supply is the largest retail farm and ranch store chain in the United States. The focus of Tractor Supply is on recreational farmers and ranchers as well as tradesmen and small businesses. Given the changing consumer trends, TSCO aims to integrate its physical and digital operations to offer consumers a seamless shopping experience.

Tractor Supply is on track to build up on its Out Here lifestyle assortment and convenient shopping format to gain new customers and market share. The strategy is essentially based on five key pillars which includes customers, digitization, execution, team members and total shareholder return.

Tractor Supply has an expected earnings growth rate of 3.3% for the current year. The Zacks Consensus Estimate for current-year earnings improved 5.7% over the last 7 days.