Back to top

Adidas and 3 Other Consumer Stocks to Buy on Market Momentum

Read MoreHide Full Article

The stock markets have been exhibiting a bull run since the start of 2017 driven by favorable economic background, which indicates that the U.S. economy is on the uptick. The commerce department stated that annual gross domestic product (GDP) rose 3.1% in second-quarter 2017, marking the best growth in three years.

Despite the supply chain disruptions due to hurricanes Harvey and Irma, a steady labor market, robust consumer spending and the recent tax cut proposal instill optimism. The new tax plan suggests a 20% corporate income tax rate; a new 25% tax rate for pass-through businesses including partnerships; and a reduced 35% high-income tax rate for individual Americans.

Notably, the optimism stemming from the robust economic data as well as the new tax reforms proposed by President Donald Trump was well reflected by the U.S. stock markets. Major stock indices closed strong on Oct 2 with the Nasdaq Composite Index adding 20.8 points to 6,516.7; the Dow Jones Industrial Average up 152.5 points to 22,557.6; and the S&P 500 improving 9.8 points to 2,529.1. This also meant a robust start to the fourth quarter of 2017.

Moreover, these indices have registered year-to-date growths of 20.3%, 13% and 11.9%, respectively. Not surprisingly, investors can make the most of this market momentum by investing in stocks that mirror the momentum of these indices.

Rightly, momentum investing can prove to be a winning strategy for investors seeking higher returns in a short span. This strategy mainly suggests capturing profits by buying hot stocks that have witnessed an uptrend in the past few weeks or months. It is based on the idea that once a stock establishes a trend, it is more likely to continue in that direction than drift away from the trajectory.

Adidas AG (ADDYY - Free Report) is one such stock which is on the roll owing to solid growth prospects. The stock has gained 20.3% in the last three months, against the industry’s fall of 9.9%. Further, this designer, producer and seller of athletic and sports lifestyle products remains well positioned to sustain this momentum as is clear from the expected long-term earnings growth rate of 20.9%. Also, a Momentum Score of B and Zacks Rank #1 (Strong Buy) justify that the company has room to run.

 3 More Momentum Stocks with Room to Run

The Momentum Score theory states that what has been going up so far will possibly continue to do so in the near future. Stocks with Style Scores of A or B, when combined with a Zacks Rank #1 or 2 (Buy) handily outperform other stocks. We have identified three other Consumer Discretionary stocks that are fundamentally strong and have displayed momentous growth of late.

PVH Corporation (PVH - Free Report) , which specializes in designing and marketing branded dress shirts, neckwear, sportswear, jeanswear, intimate apparel, swim products, footwear, handbags and other related products, is a good bet. The company’s long-term expected earnings growth rate of 13.1% show potential. Moreover, the stock has gained 10.6% in the last three months, outperforming the industry’s 1.1% increase. The company currently has a Momentum Score of B and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Another lucrative option is New York-based G-III Apparel Group, Ltd. (GIII - Free Report) . The company designs, manufactures and markets apparel for men and women. It has a Momentum Score of B and sports a Zacks Rank #1. Moreover, the company has a long-term expected earnings growth rate of 15%. The stock has grown 15.5% in the last three months, outperforming the industry’s 1.2% upside.

Investors can also count on Electronic Arts Inc. (EA - Free Report) , a leading developer, marketer, publisher and distributor of interactive games (video game software and content). It distributes gaming content and services through multiple distribution channels and directly to consumers (online and wirelessly) through its online portals Origin and Play4Free. This Redwood City, CA-based company currently has a Momentum Score of B and long-term expected earnings growth rate of 16.5%. Further, this Zacks Rank #2 stock has gained 11.9% in the last three months, outperforming the industry’s 8.4% growth.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Adidas AG (ADDYY) - free report >>

PVH Corp. (PVH) - free report >>

G-III Apparel Group, LTD. (GIII) - free report >>

Electronic Arts Inc. (EA) - free report >>

More from Zacks Analyst Blog

You May Like