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Top 5 Momentum Picks for December After Rejuvenated November
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Wall Street witnessed an impressive rally in November. After three consecutive months of decline, U.S. stock markets rebounded last month buoyed by a steadily dwindling inflation rate, recently released several weak economic data and astonishing growth of the U.S. economy.
November’s rally was broad-based. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — surged 8.8%, 8.9% and 10.7%, respectively. The small-cap benchmark Russell 2000 also advanced 8.8%. All four indexes recorded their best monthly performance in 2023. The Dow saw its best month since October 2022.
Momentum is likely to continue in December as most of the market participants are confident that the Fed is through with its current rate hike cycle. The CME FedWatch is currently showing a more than 99% probability that the central bank will keep the benchmark interest rate unchanged at 5.25-5.5%. More importantly, the tool is also showing a 50% probability that the central bank will initiate the first rate cut of 25 basis points as early as March 2024.
Our Top Picks
At this stage, it will be prudent to invest in momentum stocks. We have narrowed our search to five large-cap (market capital > $10 billion) stocks that have strong momentum for November. These companies have strong potential for 2024.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
NVIDIA Corp. (NVDA - Free Report) is gaining from the strong growth of artificial intelligence, high-performance computing and accelerated computing, which is boosting its Compute & Networking revenues. The datacenter end-market business is likely to benefit from the growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures.
A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds for NVDA. Collaboration with Mercedes-Benz and Audi is likely to advance NVDA’s presence in the autonomous vehicles and other automotive electronics space.
NVIDIA has an expected revenue and earnings growth rate of 51.7% and 52.6%, respectively, for next year (ending January 2025). The Zacks Consensus Estimate for next-year earnings has improved 3.8% over the last 30 days.
Vertiv Holdings Co. (VRT - Free Report) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. VRT offers hardware, software, analytics and ongoing services.
Vertiv Holdings has an expected revenue and earnings growth rate of 9% and 27.9%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 11.7% over the last 60 days.
Copart Inc. (CPRT - Free Report) enjoys a leadership position in the automotive auction market, commanding roughly 40% of the market share. CPRT’s competitiveness is supported by its multiple locations and the size of its new facility openings. Expansion initiatives, along with a digital ramp-up, will aid Copart in a fast pickup across the country.
The launch of Copart Max has further stepped up its digital game. Salvage auction volumes are likely to remain elevated amid an increase in vehicle miles traveled and a higher collision frequency. Additionally, aging vehicles and technologically advanced auto parts are proving to be a boon for CPRT. A strong balance sheet with low leverage and high liquidity provides CPRT with financial flexibility.
Copart has an expected revenue and earnings growth rate of 8.9% and 15.1%, respectively, for the current year (ending July 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last seven days.
Insulet Corp. (PODD - Free Report) has been progressing well on its four-pillar strategy with target-focused market expansion and innovation. PODD has been making significant progress with respect to its development roadmap of the Omnipod 5 system. The international rollout of the device continues successfully.
PODD commercially launched Omnipod 5 in the United Kingdom in June and in August, this device reached Germany commercially. Further, Insulet registered continued strong adoption of Omnipod DASH in its international markets. In terms of innovation, in October, PODD received the 510(k) clearance for the Omnipod 5 iOS app.
Insulet has an expected revenue and earnings growth rate of 19.8% and 30.2%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 9.7% over the last 30 days.
Constellation Energy Corp. (CEG - Free Report) generates and sells electricity in the United States. CEG operates through five segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions. CEG sells natural gas, and other energy-related products and services.
Constellation Energy has an expected revenue and earnings growth rate of 3.7% and 19.2%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.9% over the last seven days.
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Top 5 Momentum Picks for December After Rejuvenated November
Wall Street witnessed an impressive rally in November. After three consecutive months of decline, U.S. stock markets rebounded last month buoyed by a steadily dwindling inflation rate, recently released several weak economic data and astonishing growth of the U.S. economy.
November’s rally was broad-based. The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — surged 8.8%, 8.9% and 10.7%, respectively. The small-cap benchmark Russell 2000 also advanced 8.8%. All four indexes recorded their best monthly performance in 2023. The Dow saw its best month since October 2022.
Momentum is likely to continue in December as most of the market participants are confident that the Fed is through with its current rate hike cycle. The CME FedWatch is currently showing a more than 99% probability that the central bank will keep the benchmark interest rate unchanged at 5.25-5.5%. More importantly, the tool is also showing a 50% probability that the central bank will initiate the first rate cut of 25 basis points as early as March 2024.
Our Top Picks
At this stage, it will be prudent to invest in momentum stocks. We have narrowed our search to five large-cap (market capital > $10 billion) stocks that have strong momentum for November. These companies have strong potential for 2024.
These stocks have seen positive earnings estimate revisions in the last seven days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Momentum Score of A or B. 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 month.
Image Source: Zacks Investment Research
NVIDIA Corp. (NVDA - Free Report) is gaining from the strong growth of artificial intelligence, high-performance computing and accelerated computing, which is boosting its Compute & Networking revenues. The datacenter end-market business is likely to benefit from the growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures.
A surge in Hyperscale demand and a solid uptake of AI-based smart cockpit infotainment solutions are acting as tailwinds for NVDA. Collaboration with Mercedes-Benz and Audi is likely to advance NVDA’s presence in the autonomous vehicles and other automotive electronics space.
NVIDIA has an expected revenue and earnings growth rate of 51.7% and 52.6%, respectively, for next year (ending January 2025). The Zacks Consensus Estimate for next-year earnings has improved 3.8% over the last 30 days.
Vertiv Holdings Co. (VRT - Free Report) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. VRT offers hardware, software, analytics and ongoing services.
Vertiv Holdings has an expected revenue and earnings growth rate of 9% and 27.9%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 11.7% over the last 60 days.
Copart Inc. (CPRT - Free Report) enjoys a leadership position in the automotive auction market, commanding roughly 40% of the market share. CPRT’s competitiveness is supported by its multiple locations and the size of its new facility openings. Expansion initiatives, along with a digital ramp-up, will aid Copart in a fast pickup across the country.
The launch of Copart Max has further stepped up its digital game. Salvage auction volumes are likely to remain elevated amid an increase in vehicle miles traveled and a higher collision frequency. Additionally, aging vehicles and technologically advanced auto parts are proving to be a boon for CPRT. A strong balance sheet with low leverage and high liquidity provides CPRT with financial flexibility.
Copart has an expected revenue and earnings growth rate of 8.9% and 15.1%, respectively, for the current year (ending July 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.7% over the last seven days.
Insulet Corp. (PODD - Free Report) has been progressing well on its four-pillar strategy with target-focused market expansion and innovation. PODD has been making significant progress with respect to its development roadmap of the Omnipod 5 system. The international rollout of the device continues successfully.
PODD commercially launched Omnipod 5 in the United Kingdom in June and in August, this device reached Germany commercially. Further, Insulet registered continued strong adoption of Omnipod DASH in its international markets. In terms of innovation, in October, PODD received the 510(k) clearance for the Omnipod 5 iOS app.
Insulet has an expected revenue and earnings growth rate of 19.8% and 30.2%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 9.7% over the last 30 days.
Constellation Energy Corp. (CEG - Free Report) generates and sells electricity in the United States. CEG operates through five segments: Mid-Atlantic, Midwest, New York, ERCOT, and Other Power Regions. CEG sells natural gas, and other energy-related products and services.
Constellation Energy has an expected revenue and earnings growth rate of 3.7% and 19.2%, respectively, for next year. The Zacks Consensus Estimate for next-year earnings has improved 0.9% over the last seven days.