Credit: Shutterstock photoThe notorious crook Willie Sutton was once asked why he robbed banks. He replied in a dry but eloquent statement:
"Because that's where the money is."
When applied to financial markets, that eye for the obvious may be the secret of extraordinary success.
We now live in a world of fast markets, fast money and jam-packed trades. In this context, a winning strategy could be to simply jump on the fastest-moving train that still has a long way to go.
Translated, one of the most successful strategies today is to get in on momentum stocks at the right time. In this market, in a sense, everyone is a momentum trader, scouring for the next hot sector or stock where they can make a fast buck. That is because momentum stocks have proven to be high fliers in every market setting.
However, it remains crucial for investors to avoid chasing fads blindly. Markets today have a tendency to overreact to good and bad news, resulting in stock price movements that do not truly correspond with the company's long-term fundamentals. In such capricious, arguably overvalued markets, investors should be downright fussy about where they are putting their money.
Is Speed Enough to Ride the Gravy Train?
However, we have to ask: In these fickle markets where investment outlooks change in the blink of an eye, is mere momentum enough to take a stock higher up? What if the CEO steps down, or the company is sued, or investors suddenly panic after reading a negative analyst report? Will your high-flying momentum stock hold its tracks, or will it go off the rails?
To ensure that investors don't find themselves on the wrong side of the tracks, we usher in our new style score system .
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. Back-tested results show that stocks with Style Scores of 'A' or 'B,' when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) handily outperform other stocks.
To ensure that our stocks stick to the growth track, we have refined our screen further by adding a good Growth Style Score criteria, which gives a true sense of the quality and sustainability of a company's growth.
All Aboard these Runaway Trains!
We have thus honed in on four high-quality names with remarkable earnings stories and incredible price momentum. The positive momentum in the stock price, blended with fantastic earnings growth numbers, could just have uncovered runaway stocks that might rally throughout the rest of 2015.
Flaunting a Zacks Rank #1 or #2 and a Momentum Style Score of 'A', the following stocks are marching ahead in full steam, and still appear to have plenty of upside left.
Further, these picks have solid growth metrics, and have been seeing impressive earnings estimate revision activity of late, which suggests that analysts are getting increasingly bullish on the stocks.
BJ's Restaurants, Inc. BJRI
Headquartered in Orange County, CA, BJ's Restaurants owns and operates a chain of 147 high-end casual dining restaurants in 17 states. The company has been benefiting from the recent macroeconomic trends, as declining oil prices and recovering labor market have boosted demand for high-quality casual dining.
The company boasts the top Zacks Rank, and its earnings are set to grow at an impressive rate of 50.2% this year. Over the longer term, BJ's Restaurants is expected to multiply earnings at a rate of 33.3% annually.
Over the past month, analysts have become increasingly bullish on the company, with 13 upward estimate revisions for the company's 2015 earnings. This has led to a sharp spike in the Zacks Consensus Estimate for 2015, which now stands at $1.49.
JetBlue Airways Corporation JBLU
JetBlue Airways is a low-fare and low-cost passenger airline. The low-cost carrier recently introduced two direct flights on a weekly basis to Grenada from New York's John F. Kennedy (JFK) International Airport, in a bid to strengthen its presence in the Caribbean.JetBlue looks set to benefit from increasing demand, network expansion, fleet re-designing, capital expenditure management and lower fuel prices.
With a Zacks Rank #2, the company's bottom line is set to grow at an astounding rate of 160.8% this year. The company's expected earnings growth rate over the longer term is just as impressive at 46.7%.
Not only does the stock have an impressive short-term momentum, it has been witnessing solid activity on the earnings estimate revision front as well. Analysts clearly see good things in the company's future, as the Zacks Consensus Estimate for 2015 earnings has trended sharply up over the past month, from $1.77 to $1.83 per share, thanks to 7 upward estimate revisions versus just one lower.
Royal Caribbean Cruises Ltd. RCL
Royal Caribbean Cruises is a global cruise vacation company that operates Royal Caribbean International, Celebrity Cruises, and Royal Celebrity Tours. The company is striving to grow beyond its familiar itineraries and leverage the opportunities presented by the fast-growing Asian cruise market.
Flaunting a Zacks Rank #2, the cruise operator's earnings are set to grow at a striking 39.7% rate in 2015. Also, at 23.3%, the long-term growth expectations for the company underline the sustainability of its current growth.
Analysts have great expectations from the company this year and have been revising 2015 earnings estimates upward over the past month. Royal Caribbean has seen 9 positive revisions over the past 4 weeks, resulting in its 2015 estimate climbing from $4.61 to $4.74.
Wabash National Corp. WNC
Wabash National makes semi trailers and liquid transportation systems, including dry freight vans, refrigerated vans, platform trailers, liquid tank trailers, and intermodal equipment. The diversified industrial manufacturer is North America's leading producer of semi-trailers and liquid transportation systems.
Possessing a Zacks Rank #2, the company's earnings are set to grow at a remarkable rate of 44.4% this year. Over the longer term, Wabash National is expected to multiply earnings at a rate of 21.5% annually.
Moreover, analysts have become increasingly bullish on the company over the past month, with 6 upward estimate revisions for the company's 2015 earnings. This has led to a sharp spike in the Zacks Consensus Estimate for 2015, which now stands at $1.28, up from $1.18 a month ago.
Full Steam Ahead
If you are one of those head-in-the-clouds investors who want to have their cake and eat it too, these stocks present the perfect blend of great momentum and incredible growth. Such opportunities are few and far between, so take advantage of these stocks that are marching full steam ahead, and still appear to have a full tank of gas!
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
BJ'S RESTAURANT (BJRI): Free Stock Analysis Report
ROYAL CARIBBEAN (RCL): Free Stock Analysis Report
JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report
WABASH NATIONAL (WNC): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
