We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Top 5 Momentum Stocks for June After an Impressive May
Read MoreHide Full Article
Wall Street’s popular adages are not matching this year. April is historically known as being favorable to investors. But this year, April ended on a disappointing note. For May, the popular adage is “Sell and Go Away.” However, May 2024 turned out highly successful for U.S. stock markets.
The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — were up 2.3%, 4.8% and 6.9%, respectively. The tech-heavy Nasdaq Composite recorded its best month since November 2023. On May 31, the blue-chip Dow soared 1.5% or 574.84 points, marking its best daily performance in 2024.
Momentum Likely to Continue in June
The U.S. economy is cooling. The Department of Commerce revised the U.S. GDP growth rate downward for first-quarter 2024 to 1.3% from 1.6% reported earlier. The data is notably slower compared with the 3.4% GDP growth rate in fourth-quarter 2023. This marked the lowest quarterly GDP growth rate since second-quarter 2022.
The resilient labor market showed signs of softness. The U.S. economy added 175,000 jobs in April, missing the consensus estimate of 200,000. The unemployment rate came in at 3.9% in April, compared with the consensus estimate and March’s data of 3.8%. April marked the highest level since January 2022.
Month over month, the average hourly earnings rate was 0.2% in April, compared with the consensus estimate and March’s data of 0.3%. Year over year, the wage rate of 3.9% in April came in, below the consensus estimate of 4%.
The headline personal consumption expenditure (PCE) price index increased 0.3% month over month in April, the same as the previous two months. Year over year, PCE inflation rose 2.7% in April, the same as the data for March.
Core (excluding volatile food and energy items) PCE inflation — the Fed’s most favorite inflation gauge — rose 0.2% month over month in April compared with 0.3% in March. Year over year, core PCE inflation increased 2.8%, unchanged from the data for March.
Personal spending — the largest component of the U.S. GDP — increased 0.2% month over month in April, missing the consensus estimate of 0.3%. The metric for March was also revised downward from 0.8% reported earlier to 0.7%.
On May 15, the Department of Commerce reported that retail sales in April remained flat month over month. However, the consensus estimate was for an increase of 0.4%. The data for March was revised downward to an increase of 0.6% from 0.7% reported earlier.
Year over year, retail sales increased 2.7% in April. However, these figures are adjusted for seasonality but not inflation. Meanwhile, the consumer price index — a key inflation gauge — increased 3.4% year over year in April. This clearly indicates that consumers did not keep up with the pace of price increases.
Corporate earnings for the first quarter of 2024 continued to be solid. Total earnings of the S&P 500 companies were up 6.8% year over year on 4.3% higher revenues. Notably, in fourth-quarter 2023, total earnings of the S&P 500 companies were up 6.9% year over year on 3.9% higher revenues.
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 June. 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. 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
RB Global Inc. (RBA - Free Report) is an omnichannel marketplace that provides value-added insights, services and transaction solutions for buyers and sellers of commercial assets and vehicles. RBA’s marketplace brands include Ritchie Bros., IAA, Rouse Services, SmartEquip, Xcira and Veritread.
In addition, RBA offers title, data, transportation and logistics, refurbishing, inspection, and financial services. It serves customers across various asset classes, including automotive, commercial transportation, construction, government surplus, lifting and material handling, energy, mining, and agriculture.
RB Global has an expected revenue and earnings growth rate of 16.8% and 10%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the last 30 days.
Nutanix Inc. (NTNX - Free Report) is benefiting from the steady adoption of its Hybrid cloud solutions and an expanding clientele. Moreover, the adoption rate of NTNX’s AHV hypervisor has been strong as customers continue to opt for it as a low-cost alternative to other vendor offerings. Further, a healthy pipeline of big deals is a tailwind.
NTNX is expected to benefit from the growth prospects of the hyper-converged infrastructure market over the long term. NTNX’s transition to software-only sales will boost its margins over the long run. We expect fiscal 2024 net sales to increase 14.3% from 2023.
Nutanix has an expected revenue and earnings growth rate of 16.3% and 16.5%, respectively, for next year (ending July 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.8% over the last 30 days.
monday.com Ltd. (MNDY - Free Report) develops software applications in the United States, Europe, the Middle East, Africa, and internationally. MNDY provides Work OS, a cloud-based visual work operating system that consists of modular building blocks used and assembled to create software applications and work management tools.
MNDY also offers product solutions for work management, sales CRM, software development verticals, business development, presale, and customer success services. MNDY serves organizations, educational or government institutions, and distinct business units of an organization.
monday.com has an expected revenue and earnings growth rate of 29.5% and 23.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 19.3% over the last 30 days.
Coinbase Global Inc. (COIN - Free Report) provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.
Zacks Rank #1 Coinbase Global has an expected revenue and earnings growth rate of 83.5% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
Datadog Inc. (DDOG - Free Report) has been benefiting from strength in customer demand for offerings in modern observability, cloud security, software delivery and cloud service management. DDOG had 3,340 customers with an annual run rate of $100K or more at the end of the last reported quarter.
DDOG’s dollar-based retention rate was in the mid-110s in the first quarter as customers increased their usage and adopted more products. Contributions from a solid cloud partner base, including Google Cloud, Microsoft Azure and Amazon Web Services, remain a key growth driver of DDOG besides an expanding portfolio.
Datadog has an expected revenue and earnings growth rate of 22.1% and 16.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the last 30 days.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
Top 5 Momentum Stocks for June After an Impressive May
Wall Street’s popular adages are not matching this year. April is historically known as being favorable to investors. But this year, April ended on a disappointing note. For May, the popular adage is “Sell and Go Away.” However, May 2024 turned out highly successful for U.S. stock markets.
The three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — were up 2.3%, 4.8% and 6.9%, respectively. The tech-heavy Nasdaq Composite recorded its best month since November 2023. On May 31, the blue-chip Dow soared 1.5% or 574.84 points, marking its best daily performance in 2024.
Momentum Likely to Continue in June
The U.S. economy is cooling. The Department of Commerce revised the U.S. GDP growth rate downward for first-quarter 2024 to 1.3% from 1.6% reported earlier. The data is notably slower compared with the 3.4% GDP growth rate in fourth-quarter 2023. This marked the lowest quarterly GDP growth rate since second-quarter 2022.
The resilient labor market showed signs of softness. The U.S. economy added 175,000 jobs in April, missing the consensus estimate of 200,000. The unemployment rate came in at 3.9% in April, compared with the consensus estimate and March’s data of 3.8%. April marked the highest level since January 2022.
Month over month, the average hourly earnings rate was 0.2% in April, compared with the consensus estimate and March’s data of 0.3%. Year over year, the wage rate of 3.9% in April came in, below the consensus estimate of 4%.
The headline personal consumption expenditure (PCE) price index increased 0.3% month over month in April, the same as the previous two months. Year over year, PCE inflation rose 2.7% in April, the same as the data for March.
Core (excluding volatile food and energy items) PCE inflation — the Fed’s most favorite inflation gauge — rose 0.2% month over month in April compared with 0.3% in March. Year over year, core PCE inflation increased 2.8%, unchanged from the data for March.
Personal spending — the largest component of the U.S. GDP — increased 0.2% month over month in April, missing the consensus estimate of 0.3%. The metric for March was also revised downward from 0.8% reported earlier to 0.7%.
On May 15, the Department of Commerce reported that retail sales in April remained flat month over month. However, the consensus estimate was for an increase of 0.4%. The data for March was revised downward to an increase of 0.6% from 0.7% reported earlier.
Year over year, retail sales increased 2.7% in April. However, these figures are adjusted for seasonality but not inflation. Meanwhile, the consumer price index — a key inflation gauge — increased 3.4% year over year in April. This clearly indicates that consumers did not keep up with the pace of price increases.
Corporate earnings for the first quarter of 2024 continued to be solid. Total earnings of the S&P 500 companies were up 6.8% year over year on 4.3% higher revenues. Notably, in fourth-quarter 2023, total earnings of the S&P 500 companies were up 6.9% year over year on 3.9% higher revenues.
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 June. 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. 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
RB Global Inc. (RBA - Free Report) is an omnichannel marketplace that provides value-added insights, services and transaction solutions for buyers and sellers of commercial assets and vehicles. RBA’s marketplace brands include Ritchie Bros., IAA, Rouse Services, SmartEquip, Xcira and Veritread.
In addition, RBA offers title, data, transportation and logistics, refurbishing, inspection, and financial services. It serves customers across various asset classes, including automotive, commercial transportation, construction, government surplus, lifting and material handling, energy, mining, and agriculture.
RB Global has an expected revenue and earnings growth rate of 16.8% and 10%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.1% over the last 30 days.
Nutanix Inc. (NTNX - Free Report) is benefiting from the steady adoption of its Hybrid cloud solutions and an expanding clientele. Moreover, the adoption rate of NTNX’s AHV hypervisor has been strong as customers continue to opt for it as a low-cost alternative to other vendor offerings. Further, a healthy pipeline of big deals is a tailwind.
NTNX is expected to benefit from the growth prospects of the hyper-converged infrastructure market over the long term. NTNX’s transition to software-only sales will boost its margins over the long run. We expect fiscal 2024 net sales to increase 14.3% from 2023.
Nutanix has an expected revenue and earnings growth rate of 16.3% and 16.5%, respectively, for next year (ending July 2025). The Zacks Consensus Estimate for next-year earnings has improved 0.8% over the last 30 days.
monday.com Ltd. (MNDY - Free Report) develops software applications in the United States, Europe, the Middle East, Africa, and internationally. MNDY provides Work OS, a cloud-based visual work operating system that consists of modular building blocks used and assembled to create software applications and work management tools.
MNDY also offers product solutions for work management, sales CRM, software development verticals, business development, presale, and customer success services. MNDY serves organizations, educational or government institutions, and distinct business units of an organization.
monday.com has an expected revenue and earnings growth rate of 29.5% and 23.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 19.3% over the last 30 days.
Coinbase Global Inc. (COIN - Free Report) provides financial infrastructure and technology for the crypto economy in the United States and internationally. COIN offers the primary financial account in the crypto space for consumers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions; and technology and services that enable developers to build crypto-based applications and securely accept crypto assets as payment.
Zacks Rank #1 Coinbase Global has an expected revenue and earnings growth rate of 83.5% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% over the last 30 days.
Datadog Inc. (DDOG - Free Report) has been benefiting from strength in customer demand for offerings in modern observability, cloud security, software delivery and cloud service management. DDOG had 3,340 customers with an annual run rate of $100K or more at the end of the last reported quarter.
DDOG’s dollar-based retention rate was in the mid-110s in the first quarter as customers increased their usage and adopted more products. Contributions from a solid cloud partner base, including Google Cloud, Microsoft Azure and Amazon Web Services, remain a key growth driver of DDOG besides an expanding portfolio.
Datadog has an expected revenue and earnings growth rate of 22.1% and 16.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.5% over the last 30 days.