The markets were hoping for a rally as most economists expected the Fed to pause rate hikes in its meeting yesterday. Rates were paused, but Fed Chair Powell put a stop to short-term optimism by saying that rates will remain higher for the next two years.
The markets moved lower on that news, but there’s no reason to give up hope! Once Powell’s remarks are digested, I think we’ll see markets continue moving up, down, up, down for a while. And that means that the volatility will provide opportunities—such as these three momentum stocks that I found for you today.
I did a search on momentum stocks just to see which ones may be outperforming the market. I actually found quite a few but after analyzing them, decided the ones below were the most attractive at this point.
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Before I get to those, let me explain exactly what momentum implies. From Investopedia, here’s the definition of a momentum stock: “Momentum is the speed or velocity of price changes in a stock, security, or tradable instrument. Momentum shows the rate of change in price movement over a period of time to help investors determine the strength of a trend. Stocks that tend to move with the strength of momentum are called momentum stocks.”
What that means is that investors often find momentum opportunities for trading stocks that seem to be in an upward trend due to certain events or catalysts endemic to the stock or industry. And these three companies fit that description.
3 Momentum Stocks with Catalysts
Carrols Restaurant Group, Inc. (TAST) is the largest Burger King franchisee in the U.S. It also operates as a Popeyes franchisee.
Analyst rank: 1.5
Price target: 9.25
Current price: 6.56
The catalyst: Retail sales climbed 0.6% in August from July, considerably higher than expected (which was 0.1%), the fifth consecutive monthly increase, and were 2.5% ahead of last year’s. That paved the way for the industry to move forward. And Carroll is moving faster than most, with its current-year earnings estimate increasing by 3,800% over the past 60 days. Carroll’s forecast earnings growth for the current year is 152.9%.
Sterling Infrastructure Inc (STRL) is in the e-infrastructure, transportation, and building solutions business. It undertakes infrastructure and rehabilitation projects for highways, roads, bridges, airports, ports, light rail, water, wastewater, and storm drainage systems for the departments of transportation in various states, regional transit authorities, airport authorities, port authorities, water authorities and railroads. The company operates primarily in the Southern United States, the Northeastern and Mid-Atlantic United States, the Rocky Mountain states, California, and Hawaii, developing data centers, warehouses, highways, bridges, and single-family homes throughout the U.S.
Analyst rank: 2.5
Price target: 86.50
Current price: 72.67
The catalyst: Sterling’s second-quarter earnings per share jumped 48%, year over year, and its revenues rose. Its e-infrastructure segment saw a 16% increase in profits within the same time period. Even better, the company also raised its sales guidance for the rest of 2023.
Limbach Holdings Inc (LMB) is an integrated building systems solutions company in the United States. It operates in two segments, General Contractor Relationships and Owner Direct Relationships. The company designs, prefabricates, installs, manages, and maintains mechanical, electrical, plumbing, and control systems, as well as heating, ventilation, and air-conditioning (HVAC) systems.
Analyst rank: 2.0
Price target: 39.00
Current price: 29.74
The catalyst: Greystone Capital Management recently invested in the company, saying, “During the quarter we entered into a new position in Limbach Holdings, Inc., a microcap construction and engineering services business that is successfully shifting their business mix to stickier, more resilient, higher margin segments that over time will have the effect of contributing organic revenue growth, boosting margins and increasing cash flow generation.” The company’s earnings estimate for this year has increased 21.4% over the last 60 days.
As always, please make sure that these companies fit into your personal investing strategy and risk profile before purchasing any shares.
Happy Investing!
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