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4 Hot Momentum Stocks in the Industrial Sector

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The global economy is still fraught with uncertainties with many developed and emerging nations struggling for growth or revival. Evidently, the world’s output growth projection has been lowered by 0.1% to 3.1% for 2016 and to 3.4% for 2017 by the International Monetary Fund.  

In addition to the adversities of unfavorable foreign currency, the Chinese economy is trying to cope with the negative impacts of capital outflows while Japan is facing headwinds from low investment levels, aging population and a huge public debt. Also, the decision of United Kingdom to exit the European Union has added to the existing concerns in the global economy.

Talking about the U.S. economy, the country has a weak job market, with an unemployment rate of 4.9%. Its industrial sector is facing risks from lower export demands and weak investments. Industrial production, one of the prime economic indicators for the industrial sector, was down 1% year over year in second-quarter 2016. In addition, the collective performance of the sector’s stocks in the S&P 500 group was weak, with earnings and revenues down 1.5% and 5.6% year over year, respectively.

However, we believe that governmental policies promoting better trade relations, increased infrastructural investments, emphasis on job creation and high consumer-end demand can brighten the future for the industrial sector, going forward.

Momentum Investing to the Rescue

In such a scenario picking stocks for investors interested in the industrial sector can be a daunting task. If the investor is ready to ride on the price trend of the stock, then Momentum investing can be a solution.

This strategy works for short-term investors who prefer to profit from either buying stocks during an uptrend in price movement or selling a stock during a downtrend. However, these trends should be supported with adequate volume movements. Also, stocks believed to outperform the market can be good picks for momentum traders.

Our Picks

Through our latest style score system, we have chosen four hot stocks that have momentum score of ‘A’, carries Zacks Rank #1 (Strong Buy) or #2 (Buy) and has a market capitalization in excess of $100 million. We believe these stocks might prove to be a boon for momentum investors.

Machinery company Middleby Corporation (MIDD - Free Report) currently has a $7.4 billion market capitalization. New products launch, increasing demand from chain restaurant customers, acquisition benefits, superior cost-saving strategies and lucrative capital deployment programs are some of the driving forces for this company.

Interactive security solutions provider Alarm.Com Holdings, Inc. (ALRM - Free Report) currently has a $1.3 billion market capitalization. For 2016, the company raised its revenue and earnings per share projections on the back of increasing demand for interactive security and home automation as well as synergistic benefits from acquired assets.

Pollution Control company Heritage-Crystal Clean, Inc. has a $276 million market capitalization. For 2016, the company anticipates that increased used oil collection charges and improved oil product pricing will likely improve results for the Oil Business segment. Also, it aims to return to profitability in its Environmental Services Business by the fourth quarter.

Pollution Control company Landauer Inc. currently has a $453 million market capitalization. Higher demand for imaging physics and informatics solutions as well as progress on the development of Verifii digital dosimetry platform will be primary growth drivers for the company.

Conclusion

Until the impacts of economic headwinds subside considerably, we believe investors can benefit from investing in momentum stocks. The above-mentioned hot picks have shown a clear upward price trend year to date, while positive revision in earnings estimates indicates the continuation of the trend.  

If you are looking for top stocks with both top-notch fundamentals and strong price trends, then you are looking for momentum stocks. We have identified some of the best out there with most short term price potential in our Momentum Trader service. Click here to see some of the ways we find momentum stocks and to learn more about the Momentum Trader>>>


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The Middleby Corporation (MIDD) - free report >>

Alarm.com Holdings, Inc. (ALRM) - free report >>

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