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5 Top Momentum Stocks Flying High Amid Coronavirus-Led Rout

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The second half of February saw U.S. stock markets tumble on apprehensions regarding the rapid spread of coronavirus globally. The COVID-19 virus led epidemic has already affected nearly 89,000 people across 55 countries and accounted for 3,000 deaths so far. Market participants remain perplexed about global economic growth with China, the backbone of global supply-chain system, in jeopardy.

Wall Street’s February Meltdown

Wall Street collapsed in February, especially in the last two weeks. In February, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — shed 10%, 8.4% and 6.4%, respectively. This disappointing performance put these three indexes in the negative territory year to date with a loss of 11%, 8.6% and 4.5%, respectively.

Notably, for the week ended Feb 28, the Dow, the S&P 500 and the Nasdaq Composite —tumbled 12.4%, 11.5% and 10.5%, respectively, recording their worst-ever weekly decline since October 2008. In this week, around $6 trillion of investor’s money evaporated from the system.

All these indexes are currently in correction territory (defined as a decline of 10% but not more than 20% from its recent high level). Notably, the Dow’s latest high was recorded on Feb 12 while both the S&P 500 and the Nasdaq Composite touched fresh highs on Feb 19. The Dow lost 3,583 points in the last week of February, marking its largest weekly decline pointwise. Meanwhile, 96% stocks of the entire S&P 500 index is in correction territory.

Severe volatility has gripped U.S. stock markets in the last four trading sessions. In the previous week, The CBOE VIX — which reflects S&P 500 option bets to calculate expectations for volatility over the coming 30 days — skyrocketed nearly 135% to close at 40.11. On Feb 28, the volatility index touched 49.48 — the highest level since February 2018.

5 Momentum Stocks Flying High

Despite the collapse of Wall Street owing to the outbreak of the coronavirus, a handful of stocks have withstood the market mayhem. Meanwhile, momentum investing calls for a continuous appraisal of stocks, which ensures that an investor does not pick a beaten-down name and overlook a thriving one. Momentum investors buy high on the anticipation that the stock will only ascend in the short to intermediate term.

We have narrowed down our search to five momentum stocks that have popped in the last month. All these stock witnessed solid earnings revisions in the last 30 days and have robust growth potential. Each of our picks carry a Zacks Rank #1 (Strong Buy) and 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.

 

Dropbox Inc. (DBX - Free Report) provides a collaboration platform worldwide. Its platform allows individuals, teams, and organizations to collaborate and sign up for free through its website or app and upgrade to a paid subscription plan for premium features.

The company has an expected earnings growth rate of 44% for the current year. The Zacks Consensus Estimate for the current year has improved by 26.3% over the past 30 days. The stock price has surged 15.6% in the past month.

Enphase Energy Inc. (ENPH - Free Report) designs, develops and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. It sells solutions primarily to distributors and directly to large installers, original equipment manufacturers, strategic partners and homeowners.

The company has an expected earnings growth rate of 33.7% for the current year. The Zacks Consensus Estimate for the current year has improved by 25.7% over the past 30 days. The stock price has rallied 48.7% in the past month.

First Western Financial Inc. (MYFW - Free Report) provides private banking, personal trust, investment management, mortgage loans and institutional asset management services. It operates through three segments: Wealth Management, Capital Management and Mortgage.

The company has an expected earnings growth rate of 50% for the current year. The Zacks Consensus Estimate for the current year has improved by 22.4% over the past 30 days. The stock price has advanced 13% in the past month.

SolarEdge Technologies Inc. (SEDG - Free Report) designs, develops, and sells direct current optimized inverter systems for solar photovoltaic installations worldwide. Its SolarEdge system consists of power optimizers, inverters, communication and smart energy management solutions, and a cloud based monitoring platform.

The company has an expected earnings growth rate of 27% for the current year. The Zacks Consensus Estimate for the current year has improved by 10.6% over the past 30 days. The stock price has appreciated 23.5% in the past month.

Stamps.com Inc. (STMP - Free Report) provides Internet-based mailing and shipping solutions in the United States and Europe. It offers mailing and shipping solutions to mail and ship various mail pieces and packages through the United States Postal Service under the Stamps.com and Endicia brands.

Although, the company has a negative expected earnings growth rate for the current year, the Zacks Consensus Estimate for the current year and current quarter have improved by 30.2% and 23.1%, respectively, over the past 30 days. The stock price has jumped 92.7% in the past month.

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