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Top 5 Momentum Stocks for April After a Strong March
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Wall Street ended a strong March, marking the fifth consecutive positive month for all three major stock indexes. Last month, the Dow, the S&P 500 and the Nasdaq Composite were up 2.1%, 3.1% and 1.8%, respectively. In fact, the Dow posted its first five-month winning streak since May 2021.
U.S. stock markets have maintained their northward journey in 2024 after witnessing an astonishing 2023. Year to date, the Dow, the S&P 500 and the Nasdaq Composite have advanced 5.1%, 10.8% and 11.4%, respectively.
Momentum Likely to Continue
The Department of Commerce reported that the U.S. economy grew at a clip of 3.4% in fourth-quarter 2023, well above the initial consensus estimate of 2%. The U.S. GDP rose 2.5% in 2023 compared with 1.9% in 2022. At the beginning of 2023, the consensus estimate for full-year GDP was 2%. On Mar 29, the Atlanta Fed GDPNow tracker forecast a 2.9% growth rate for first-quarter 2024, indicating, no chance of a near-term recession.
The headline personal consumption expenditure (PCE) price index rose 0.3% month over month in February and 2.5% annually. The January numbers were a rise of 0.4% month over month and 2.5% year over year.
The core PCE price index (excluding volatile food and energy items) rose 0.3% month over month and 2.8% annually in February, while the respective January numbers were 0.5% and 2.9%. Notably, the core PCE price index is the Fed’s most favored inflation gauge. The annual increase of the core PCE inflation rate in February 2024 was the lowest since February 2021.
Personal consumption expenditure increased 0.8% month over month in February, compared with the consensus estimate of 0.5% and 0.2% increase in January. Personal income rose 0.3% month over month in February, compared with the consensus estimate of 0.5% and 1% increase in January. Personal savings rate dropped to 3.6% in February from upwardly revised 4.1% in January.
The CME FedWatch currently shows a 61% probability of the first cut of the existing Fed funds rate in the June FOMC meeting. The Fed Chairman Jerome Powell indicated three rate cuts of 25 basis points each in 2024.
Our Top Picks
At this stage, it will be prudent to invest in momentum stocks. We have narrowed our search to five large-cap stocks that have strong momentum for April. These companies have strong potential for 2024 too.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
NVIDIA Corp.’s (NVDA - Free Report) Compute & Networking revenues are gaining from the strong growth of AI, high-performance and accelerated computing. The data center end-market business is likely to benefit from the growing demand for generative AI and large language models using graphic processing units based on NVIDIA Hopper and Ampere architectures.
A surge in hyperscale demand and higher sell-ins to partners across the Gaming and ProViz end markets following the normalization of channel inventory are acting as tailwinds for NVDA. Collaborations with Mercedes-Benz and Audi are likely to advance NVDA’s presence in autonomous vehicles and other automotive electronics space.
NVIDIA has an expected revenue and earnings growth rate of 72.6% and 84%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
The Progressive Corp. (PGR - Free Report) continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. Focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for PGR’s growth.
Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.
The Progressive has an expected revenue and earnings growth rate of 15.1% and 61.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last seven days.
UiPath Inc. (PATH - Free Report) provides an end-to-end automation platform that offers a range of robotic process automation solutions primarily in the United States, Romania, and Japan. PATH offers a suite of interrelated software to build, manage, run, engage, measure, and govern automation within the organization. PATH’s platform combines artificial intelligence with desktop recording, back-end mining of both human activity and system logs, and intuitive visualization tools.
UiPath has an expected revenue and earnings growth rate of 15.9% and 5.6%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 16.3% over the last 30 days.
Carlisle Companies Inc. (CSL - Free Report) is set to gain from its focus on delivering innovative new products, driven by increased investment in research and development. CSL’s diversified business structure enables it to tap opportunities and neutralize operating risks associated with a single market. Strong demand for reroofing products bodes well for the CCM segment.
Solid repair and remodel demand across the building envelope in commercial and residential markets augurs well for the CWT segment. Synergies from several buyouts bolster CSL’s growth. Contribution from CSL Operating System and price realization are supporting its margins. Its shareholder-friendly policies are encouraging.
Carlisle Companies has an expected revenue and earnings growth rate of 5% and 11%, respectively, for the next year (ending December 2025). The Zacks Consensus Estimate for current-year earnings has improved 1% over the last seven days.
Core & Main Inc. (CNM - Free Report) distributes water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies and professional contractors in the municipal, non-residential and residential end markets in the United States.
CNM’s products portfolio includes pipes, valves, hydrants, fittings, and other products and services, storm drainage products, fire protection products, and meter products, CNM’s products and services are used in the maintenance, repair, replacement and construction of water and fire protection infrastructure.
Core & Main has an expected revenue and earnings growth rate of 12.6% and 20%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the last 30 days.
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Top 5 Momentum Stocks for April After a Strong March
Wall Street ended a strong March, marking the fifth consecutive positive month for all three major stock indexes. Last month, the Dow, the S&P 500 and the Nasdaq Composite were up 2.1%, 3.1% and 1.8%, respectively. In fact, the Dow posted its first five-month winning streak since May 2021.
U.S. stock markets have maintained their northward journey in 2024 after witnessing an astonishing 2023. Year to date, the Dow, the S&P 500 and the Nasdaq Composite have advanced 5.1%, 10.8% and 11.4%, respectively.
Momentum Likely to Continue
The Department of Commerce reported that the U.S. economy grew at a clip of 3.4% in fourth-quarter 2023, well above the initial consensus estimate of 2%. The U.S. GDP rose 2.5% in 2023 compared with 1.9% in 2022. At the beginning of 2023, the consensus estimate for full-year GDP was 2%. On Mar 29, the Atlanta Fed GDPNow tracker forecast a 2.9% growth rate for first-quarter 2024, indicating, no chance of a near-term recession.
The headline personal consumption expenditure (PCE) price index rose 0.3% month over month in February and 2.5% annually. The January numbers were a rise of 0.4% month over month and 2.5% year over year.
The core PCE price index (excluding volatile food and energy items) rose 0.3% month over month and 2.8% annually in February, while the respective January numbers were 0.5% and 2.9%. Notably, the core PCE price index is the Fed’s most favored inflation gauge. The annual increase of the core PCE inflation rate in February 2024 was the lowest since February 2021.
Personal consumption expenditure increased 0.8% month over month in February, compared with the consensus estimate of 0.5% and 0.2% increase in January. Personal income rose 0.3% month over month in February, compared with the consensus estimate of 0.5% and 1% increase in January. Personal savings rate dropped to 3.6% in February from upwardly revised 4.1% in January.
The CME FedWatch currently shows a 61% probability of the first cut of the existing Fed funds rate in the June FOMC meeting. The Fed Chairman Jerome Powell indicated three rate cuts of 25 basis points each in 2024.
Our Top Picks
At this stage, it will be prudent to invest in momentum stocks. We have narrowed our search to five large-cap stocks that have strong momentum for April. These companies have strong potential for 2024 too.
These stocks have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has 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 year to date.
Image Source: Zacks Investment Research
NVIDIA Corp.’s (NVDA - Free Report) Compute & Networking revenues are gaining from the strong growth of AI, high-performance and accelerated computing. The data center end-market business is likely to benefit from the growing demand for generative AI and large language models using graphic processing units based on NVIDIA Hopper and Ampere architectures.
A surge in hyperscale demand and higher sell-ins to partners across the Gaming and ProViz end markets following the normalization of channel inventory are acting as tailwinds for NVDA. Collaborations with Mercedes-Benz and Audi are likely to advance NVDA’s presence in autonomous vehicles and other automotive electronics space.
NVIDIA has an expected revenue and earnings growth rate of 72.6% and 84%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days.
The Progressive Corp. (PGR - Free Report) continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. Focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for PGR’s growth.
Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.
The Progressive has an expected revenue and earnings growth rate of 15.1% and 61.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last seven days.
UiPath Inc. (PATH - Free Report) provides an end-to-end automation platform that offers a range of robotic process automation solutions primarily in the United States, Romania, and Japan. PATH offers a suite of interrelated software to build, manage, run, engage, measure, and govern automation within the organization. PATH’s platform combines artificial intelligence with desktop recording, back-end mining of both human activity and system logs, and intuitive visualization tools.
UiPath has an expected revenue and earnings growth rate of 15.9% and 5.6%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 16.3% over the last 30 days.
Carlisle Companies Inc. (CSL - Free Report) is set to gain from its focus on delivering innovative new products, driven by increased investment in research and development. CSL’s diversified business structure enables it to tap opportunities and neutralize operating risks associated with a single market. Strong demand for reroofing products bodes well for the CCM segment.
Solid repair and remodel demand across the building envelope in commercial and residential markets augurs well for the CWT segment. Synergies from several buyouts bolster CSL’s growth. Contribution from CSL Operating System and price realization are supporting its margins. Its shareholder-friendly policies are encouraging.
Carlisle Companies has an expected revenue and earnings growth rate of 5% and 11%, respectively, for the next year (ending December 2025). The Zacks Consensus Estimate for current-year earnings has improved 1% over the last seven days.
Core & Main Inc. (CNM - Free Report) distributes water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies and professional contractors in the municipal, non-residential and residential end markets in the United States.
CNM’s products portfolio includes pipes, valves, hydrants, fittings, and other products and services, storm drainage products, fire protection products, and meter products, CNM’s products and services are used in the maintenance, repair, replacement and construction of water and fire protection infrastructure.
Core & Main has an expected revenue and earnings growth rate of 12.6% and 20%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the last 30 days.