President-elect Donald Trump’s Boxing Day tweet is good news for all you momentum investors!
In a self-applauded tweet, Trump stated that "The world was gloomy before I won -- there was no hope. Now the market is up nearly 10% and Christmas spending is over a trillion dollars!”
Market-friendly policies, steady U.S. job data, improving consumer confidence and an upbeat U.S. gross domestic product are all helping the broader market move north. In fact, all the major benchmarks including S&P 500, Nasdaq and Dow registered post-election gains of 5.6%, 5.3% and 8.6%, respectively.
We believe that this trend is expected to continue; hence, smart investors can currently rely on momentum investment approach. Parking hard-earned money, per this short-term strategy, will enable investors grab stocks which are currently performing better than their peers and are highly anticipated to continue the trend in the near term as well.
Equity Universe in Bull Run
Trump has provided adequate impetus to the markets with his pro-growth policies. His intention to roll back banking regulations, boost government spending and slash taxes has given rise to very bullish market sentiment. Additionally, stable job growth in the U.S. market has also been reinforcing the broader market.
Per media reports, Christmas sales in 2016 are expected to cross $1 trillion, reflecting a 3.6–4% year-over-year increment. Performance of the market during these trading days mostly gives a fair view of how the market would likely perform in the coming year.
The third estimate of the Bureau of Economic Analysis showed that the U.S. gross domestic product (‘GDP’) has increased at an annualized rate of 3.5%, as against the anticipated pace of 3.3%. This upside is buoyed by higher consumer spending (read more:
5 Stocks to Buy as Q3 GDP Rises).
In addition, according to The Conference Board, the Consumer Confidence Index has increased from 109.4, this November, to 113.7, this month, hitting the highest level since 2001 (read more:
5 Stocks to Buy on 15-Year High Consumer Confidence). Zacks Counsel
We believe that investors can earn handsome profits by extrapolating the current bullish trends of the market into the future. Henceforth, seeking refuge on momentum investment strategy is a meaningful investment bet at this moment.
However, picking the right momentum stocks may baffle even seasoned investors, let alone the new ones, who are planning to enter the uncharted world of jam-packed trades.
Here, at Zacks, we use our style score system to single out the stocks which can aid you in beating the market.
The Zacks Momentum Style Score indicates when the timing is best to grab a stock and take advantage of its momentum with the highest probability of success.
Our research shows that stocks with a Momentum Score of ‘A,’ when combined with a Zacks Rank #1 (Strong Buy), offer the best upside potential in the short term. Further, we have refined our search by considering stocks with Value-Growth-Momentum (VGM) Score of ‘A’ or ‘B,’ and price as a % of 52-week high/low greater than 80.
4 hot stocks with a Zacks Rank #1, VGM Score ‘A’ and Momentum Score ‘A’ are listed below:
Angang Steel Company Limited ANGGY is an U.S.-based specialty finance company. Price as a % of 52-week high/low: 93.7%. Over the last 1 month the company’s shares recorded a return of 4.55%, as against the negative return of 0.40% provided by the Zacks categorized Steel Producers industry. You can see . the complete list of today’s Zacks #1 Rank stocks here The Chemours Company CC offers performance chemicals in the Asia Pacific, the Middle East, Africa, Latin America and North America. Price as a % of 52-week high/low: 82.3%. Over the last 3 months the company’s shares recorded a return of 40%-outperforming 8.21% return provided by the Zacks categorized Chemicals-Diversified industry. Hawaiian Holdings, Inc. HA offers scheduled air transportation of cargo and passengers. Price as a % of 52-week high/low: 97.7%. Over the last 1 month the company’s shares recorded a return of 12.95%-outperforming 4.78% return provided by the Zacks categorized Transportation-Airline industry. PennyMac Mortgage Investment Trust ( PMT Quick Quote PMT - Free Report) is an U.S.-based specialty finance company. Price as a % of 52-week high/low: 90.3%. Over the last 3 months the company’s shares recorded a return of 3.34%, as against the negative return of 0.32% provided by the Zacks categorized Real Estate Operations industry. Inference
It seems to be the correct time to go by Wall Street’s relatively new buzz word, “Buy High and Sell Higher” and lookout for stocks that can scale new heights. Given that a substantial section of investors today favor betting on winning stocks, with the belief that they can still soar higher, it is the right time to hitch the momentum ride.
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