Momentum investing is built on the belief that once a trend is established, it is more likely to continue in that direction than to reverse the trend. Overall, the current bull market has been a momentum investor’s dream, and this belief has been confirmed by our major indexes, which have broken into new highs several times this year.
As 2017 starts to wrap up, an optimistic global economy and strong earnings growth seem to indicate that our long-running bull market will continue. There are certainly a number of domestic and international political sagas that could threaten this bullishness, but until our fundamental picture changes, stocks should keep surging.
With that said, it’s time for investors to focus in on strong momentum stocks that have continued to test new highs. Luckily, our proven Zacks Rank works in conjunction with these specific stock trends, and our Style Scores system includes a “Momentum” category that highlights these surging stocks.
Today we have highlighted three stocks that are all currently sporting a Zacks Rank #1 (Strong Buy) and a Momentum grade of “A.” Check out these three momentum stocks to buy now:
1. Take-Two Interactive (TTWO - Free Report)
Thanks to strong digital revenues, Take-Two has emerged as 2017’s hottest video game stock. Shares are up over 134% year-to-date, and TTWO is continually testing new highs. What’s more, strong guidance has led to rising earnings estimates, a strong Zacks Rank, and impressive growth projections. For Take-Two’s upcoming fiscal year, our consensus estimates are calling for EPS growth of 67% and sales growth of 40%. If those estimates hold up, it won’t be long until TTWO is skyrocketing into new highs.
2. Deutsche Lufthansa AG (DLAKY - Free Report)
The struggles of the domestic airline industry have been well-documented, but foreign carriers like Lufthansa have actually been soaring recently. In fact, the stock is up more than 143% in 2017 alone. On top of its strong Zacks Rank and impressive momentum, DLAKY is also sporting an “A” grade for Value. With a Forward P/E ratio of 7.09 and a TTM P/S ratio of 0.39, the stock is trading at a discount compared to its industry average. While investors do inherent certain risks with airline stocks, DLAKY looks like a strong option for various reasons.
3. STMicroelectronics NV (STM - Free Report)
Semiconductor stocks have dominated the tech landscape this year, and companies like STMicroelectronics, which designs chips that are perfect for use in the Internet of Things, have led the pack. STM has gained more than 111% year-to-date and is showing no signs of slowing down. In fact, after a fiscal 2017 that is expected to finish with earnings growth of 200%, STM is expected to see EPS growth of 33% and sales growth of 10% next year. This could result in further share price gains, especially if STM can outperform these estimates.
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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.
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