When it comes to investing, momentum can be the difference between a stock that’s ready to go the distance and one that barely
makes it out of the gate.
So sit back and relax while you look over our 12 momentum stocks to trade now.
But don’t relax for too long. These are fast-moving trades that you need to jump on now!
Next: Momentum Stock #1
Momentum Stock #1: Amazon.comBy Nick Atkeson and Andrew Houghton
The strongest horse on the track right now that just keeps pulling further ahead is Amazon.com (AMZN).
The company blew away earnings estimates on April 23 — so much for the consumer slowdown during this recession — and analysts
are scrambling to revise their projections for the company higher. A recent Barron’s cover story called Amazon “The World’s Best
Retailer,” and the love fest is just beginning to heat up. Amazon is becoming a must-own stock.
AMZN is us about 67% year-to-date, and is in the top 10% of all stocks in terms of its relative strength. It’s riding up its
10-day moving average, and its 20- and 50-day moving averages have moved up through the 200-day moving average. This is a huge
bull move. Currently trading in the mid-$80s, this stock should be able to reach its 2007 highs at about $100 during this trip
around the track.
Next: Momentum Stock #2
Momentum Stock #2: Gilead SciencesBy Sam Collins
This biopharmaceutical company engages in the discovery, development and commercialization of therapeutics for the treatment
of life-threatening infectious diseases. The swine flu scare will no doubt have a positive impact on Gilead Sciences (GILD),
since it could be a major manufacturer of any serum produced to combat the new strain.
GILD is trading in a huge triangle, which, if penetrated
on the upside, could yield an above average return. A break above the 200-day moving average at $48 could lead to a challenge
of the bearish resistance line at $52, and lead to new high with a target of about $75.
See four Top Swine Flu Stocks that have also seen momentum due
to the pandemic flu scare.
Next: Momentum Stock #3
Momentum Stock #3: Consumer Discretionary SPDRBy Michael Shulman
The race is on. Will the consumer spending slowdown accelerate, or will the slowdown, in fact, slow down? Notice that I did
not mention consumer spending hitting a bottom. Everyone is talking about the “second derivative” of economic activity — i.e.,
we’re seeing a slowdown in the rate of slowdown. Give me a break.
Buy longer-term put options on
the Consumer Discretionary SPDR (XLY), the ETF for consumer discretionary
spending.
Retail isn’t the only sector you should be shorting. Learn fivereasons you should avoid tech and get three stocks to short.
Next: Momentum Stock #4
Momentum Stock #4: SPDR Gold SharesBy Sam Collins
SPDR Gold Shares (GLD) is an exchange-tradedfund (ETF) that seeks to mirror the price of gold bullion. Following a rise from under $41 in 2006 to over $110 in March
2008, GLD spent most of 2008 in a downtrend, which reached $66 in early October. Since then it has tracked the price of bullion,
and along the way it flashed one of the most respected bullish signals, the gold cross, which usually precedes a major advance.
Following its run to $100, GLD pulled back to support at the 200-day moving average, where it double-bottomed at $85. It has
now flashed a buy from the Moving Average Convergence Divergence (MACD) indicator and broke the intermediate resistance line.
The trading target is $95 to $100.
GLD is just one of the 12 Commodity Bargain Trades you
want to own now.
Next: Momentum Stock #5
Momentum Stock #5: Carnival Corp.By Chris Johnson and Jon Lewis
Carnival Corp. (CCL) is the operator of Carnival Cruise Lines. The
company’s stock was just hit by news of the swine flu outbreak, providing short-term traders with an opportunity to buy this momentum
play after a short break in its stride.
More aggressive traders may find the CCL June 25 Call (CCLFE)
to be an attractive short-term strategy as the stock fights back into the pack.
The swine flu scare isn’t just impacting travel stocks. Get the top biotechstocks that have been affected.
Next: Momentum Stock #6
Momentum Stock #6: NetEase.comBy Nick Atkeson and Andrew Houghton
NetEase.com (NTES) is moving higher with surprising ease, and it
is in the top 10% of all stocks in terms of relative strength. The stock is up almost 40% year-to-date as it continues to successfully
navigate the interactive gaming community in China with the right offerings. Younger consumers love the intimate online community
that offers free Web-based e-mail, online auctions, chat, instant messaging, match-making and e-commerce services.
NTES is not just at a 52-week high, it is pushing to new all-time highs with amazing regularity. For China, this worldwide slowdown
has meant growth is now only 6%-plus, and the Internet revolution in China shows no signs of slowing. NTES earnings keep
climbing, and this 12-multiple stock could go a lot higher if China continues to grow and the world economies begin to recover.
Although the stock is pressing to new highs, it is clearly not fully appreciated as it trades with a low-teen multiple. If you
want to own a part of the fastest economic growth segment in the fastest-growing large economy, NetEase offers that exposure.
Next: Momentum Stock #7
Momentum Stock #7: Ultra Petroleum Corp.By Sam Collins
This exploration, development, and production oil and gas company is focused on developing and expanding a tight gas sand deposit
in the Green River Basin in southwest Wyoming.
After falling from over $100 a share in June 2008, Ultra Petroleum Corp. (UPL)
completed a double-bottom at $30, and recently broke from a series of tops at $40 on high volume. This breakout created a buy
signal from the MACD indicator and a trading target of $54.
Next: Momentum Stock #8
Momentum Stock #8: iShares MSCI Emerging Markets IndexBy Chris Johnson and Jon Lewis
The international ETF scene was one of the best-performing groups in 2008. Now, after a rapid fall from glory, international
ETFs like iShares MSCI Emerging Markets Index (EEM) are starting to
trend with some momentum, as money starts flying out of our borders into emerging markets again.
Investors may find the EEM shares to be one of the better ways to play this momentum trend.
Learn 10 Reasons to Use ETFs When Trading Options.
Next: Momentum Stock #9
Momentum Stock #9: ProShares UltraShort FinancialsBy Michael Shulman
The momentum in the banks is still to the downside. This ProShares UltraShort Financials (SKF)
is the double-inverse ETF for the financial sector. Translation: This ETF goes up between 1.5 and 2 percentage points for every
point of decline in the Dow Jones Financial Index.
The banks all need capital long term, and the results of even wishy-washy stress tests will highlight this. And the banks, over
time, will sell off.
Next: Momentum Stock #10
Momentum Stock #10: O’Reilly Automotive Inc.By Nick Atkeson and Andrew Houghton
O’Reilly Automotive Inc. (ORLY) is a specialty retailer of automotive
aftermarket parts, tools, supplies and equipment to both “do-it-yourself” and professional mechanics. Much of their product line
is comprised of remanufactured parts, which sell for substantially less than new parts.
Automakers are seeing a huge drop in sales, as people are driving the cars they already own longer. With shining, black Escalades
and Hummers becoming as uncool as a $4 cup of coffee from Starbucks (SBUX),
the trend toward acting financially conservative could last a while. The logic is simple: Older cars need more maintenance. Do-it-yourself
and pro mechanics need more parts from O’Reilly. Earnings rise. Stock investors need more ORLY stock. Momentum gains force.
Next: Momentum Stock #11
Momentum Stock #11: Pulte HomesBy Sam Collins
This U.S. homebuilder and financial services stock fell from over $48 a share in 2005, to under $7 in November. But the lows
in October, November and March form a bullish triple-bottom. And new buy signals from our internal indicator, the Collins-Bollinger
Reversal (CBR), and a new signal from the MACD indicator could be telling us that a major breakout from a long-term base is about
to occur.
Furthermore, Pulte Homes (PHM) recently agreed to acquire rival
Centex (CTX). With $3.4 billion in cash, Pulte CEO Richard J. Dugas
Jr. said the combination puts them “in an excellent position to navigate through the current housing downturn.”
The trading target is $14 to $16.
Next: Momentum Stock #12
Momentum Stock #12: Citrix SystemsBy Chris Johnson and Jon Lewis
Technology has been the leader of this rally right out of the gate in March. With capital expenditures likely to pick up in
the second half of 2009, companies like Citrix Systems (CTXS) are
likely to get another fundamental push as they head into the end of the year.
We like CTRX as a technology play on the second-half 2009 momentum.
More from our analyst’s:
- 7 Penny Stocks That Could Change Your
Life - Test Your Options IQ
- Top Swine Flu Stocks
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