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5 Momentum Stocks to Buy for July After a Steady June
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U.S. stock markets maintained their bull run in June. The three major stock indexes — the Dow, the S&P 500, and the Nasdaq Composite — were up 1.1%, 3.5% and 6%, respectively. These three indexes posted their seventh positive month in the last eight. Wall Street remained subdued in the first half of June. Nevertheless, stocks gathered pace in the second half buoyed by favorable economic data.
Catalysts for July
The Department of Commerce reported that the headline personal consumption expenditure (PCE) price index remained flat month over month in May compared with a 0.3% increase in April. Year over year, PCE inflation rose 2.6% in May compared with 2.7% in April.
The core PCE price index (excluding volatile food and energy items) rose 0.1% month over month in May compared with 0.3% growth in April. Year over year, core PCE inflation — the Fed’s most favorite inflation gauge — rose 2.6% in May compared with 2.8% in April. May marked the lowest monthly rise of this metric since March 2021.
In May, personal income rose 0.5% moth over month compared with the consensus estimate of a 0.4% rise and a 0.3% rise in April. However, personal spending rose 0.2% in May, less than the consensus estimate of 0.3%. The metric for April was also revised downward to a gain of 0.1% compared with 0.2% reported earlier.
The Institute of Supply Management reported that manufacturing activities contracted in May for the second consecutive month and the 18th time in the last 19 months. Retail sales in May increased by 0.1%, well below the consensus estimate of 0.4%.
The Department of Commerce revised the U.S. GDP growth rate downward for first-quarter 2024 to 1.4% from 1.6% reported earlier. The growth is notably slower than the 3.4% GDP growth rate in fourth-quarter 2023. This marked the lowest quarterly GDP growth rate since second-quarter 2022.
All these data indicate that the U.S. economy is cooling. The University of Michigan reported that the consumer sentiment index for June came in at 68.2% from the preliminary 65.6% reading. The one-year inflation outlook fell to 3% from 3.3% expected in May.
Consequently, the CME FedWatch currently shows a 65.3% probability that the Fed will reduce the existing benchmark lending rate by at least 25 basis points in September. The interest rate derivative tool also shows a 64.2% probability that the central bank will cut interest rate by 50 basis points by December 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 July. These companies have strong potential for the rest of 2024. 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 in the past three months.
Image Source: Zacks Investment Research
Advanced Drainage Systems Inc. (WMS - Free Report) is a manufacturer of thermoplastic corrugated pipe, providing a comprehensive suite of water management products and drainage solutions for use in the construction and infrastructure marketplace.
WMS provides single, double and triple-wall corrugated polypropylene and polyethylene pipes, and allied products comprising PVC drainage structures, fittings and filters, and water quality filters and separators. WMS’ products are used across a broad range of end markets and applications, including non-residential, residential, agriculture and infrastructure applications.
Advanced Drainage Systems has an expected revenue and earnings growth rate of 5.1% and 12.2%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 6.2% over the last 30 days.
Vistra Corp. (VST - Free Report) operates as an integrated retail electricity and power generation company. VST retails electricity and natural gas to residential, commercial, and industrial customers across 20 states in the United States and the District of Columbia.
VST operates through six segments: Retail, Texas, East, West, Sunset, and Asset Closure. VST is involved in electricity generation, wholesale energy purchases and sales, commodity risk management, fuel production, and fuel logistics management activities.
Vistra has an expected revenue and earnings growth rate of 15% and 10%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the last 30 days.
Spotify Technology S.A. (SPOT - Free Report) provides audio streaming services worldwide. SPOT operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers.
The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its subscribers on their computers, tablets, and compatible mobile devices. SPOT also offers sales, distribution and marketing, contract research and development, and customer support services.
Spotify Technology has an expected revenue and earnings growth rate of 17.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 30 days.
Chewy Inc. (CHWY - Free Report) is engaged in the pure-play e-commerce business in the United States. CHWY provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its www.chewy.com retail Website, as well as its mobile applications.
CHWY has expected revenue and earnings growth rates of 5.5% and 39.1%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last seven days.
Barrick Gold Corp. (GOLD - Free Report) is expected to gain from the progress in key growth projects including Goldrush, the Pueblo Viejo expansion, Lumwana Super Pit and Reko Diq, which are likely to significantly contribute to its production.
GOLD continues to focus on high-return investments, particularly in Nevada, bolstered by successful exploration programs and ongoing project executions. The merger with Randgold also fortified GOLD’s position in the industry, now owning top-tier assets. The joint venture with Newmont provides additional upsides.
Barrick Gold has an expected revenue and earnings growth rate of 10.5% and 28.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last seven days.
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5 Momentum Stocks to Buy for July After a Steady June
U.S. stock markets maintained their bull run in June. The three major stock indexes — the Dow, the S&P 500, and the Nasdaq Composite — were up 1.1%, 3.5% and 6%, respectively. These three indexes posted their seventh positive month in the last eight. Wall Street remained subdued in the first half of June. Nevertheless, stocks gathered pace in the second half buoyed by favorable economic data.
Catalysts for July
The Department of Commerce reported that the headline personal consumption expenditure (PCE) price index remained flat month over month in May compared with a 0.3% increase in April. Year over year, PCE inflation rose 2.6% in May compared with 2.7% in April.
The core PCE price index (excluding volatile food and energy items) rose 0.1% month over month in May compared with 0.3% growth in April. Year over year, core PCE inflation — the Fed’s most favorite inflation gauge — rose 2.6% in May compared with 2.8% in April. May marked the lowest monthly rise of this metric since March 2021.
In May, personal income rose 0.5% moth over month compared with the consensus estimate of a 0.4% rise and a 0.3% rise in April. However, personal spending rose 0.2% in May, less than the consensus estimate of 0.3%. The metric for April was also revised downward to a gain of 0.1% compared with 0.2% reported earlier.
The Institute of Supply Management reported that manufacturing activities contracted in May for the second consecutive month and the 18th time in the last 19 months. Retail sales in May increased by 0.1%, well below the consensus estimate of 0.4%.
The Department of Commerce revised the U.S. GDP growth rate downward for first-quarter 2024 to 1.4% from 1.6% reported earlier. The growth is notably slower than the 3.4% GDP growth rate in fourth-quarter 2023. This marked the lowest quarterly GDP growth rate since second-quarter 2022.
All these data indicate that the U.S. economy is cooling. The University of Michigan reported that the consumer sentiment index for June came in at 68.2% from the preliminary 65.6% reading. The one-year inflation outlook fell to 3% from 3.3% expected in May.
Consequently, the CME FedWatch currently shows a 65.3% probability that the Fed will reduce the existing benchmark lending rate by at least 25 basis points in September. The interest rate derivative tool also shows a 64.2% probability that the central bank will cut interest rate by 50 basis points by December 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 July. These companies have strong potential for the rest of 2024. 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 in the past three months.
Image Source: Zacks Investment Research
Advanced Drainage Systems Inc. (WMS - Free Report) is a manufacturer of thermoplastic corrugated pipe, providing a comprehensive suite of water management products and drainage solutions for use in the construction and infrastructure marketplace.
WMS provides single, double and triple-wall corrugated polypropylene and polyethylene pipes, and allied products comprising PVC drainage structures, fittings and filters, and water quality filters and separators. WMS’ products are used across a broad range of end markets and applications, including non-residential, residential, agriculture and infrastructure applications.
Advanced Drainage Systems has an expected revenue and earnings growth rate of 5.1% and 12.2%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 6.2% over the last 30 days.
Vistra Corp. (VST - Free Report) operates as an integrated retail electricity and power generation company. VST retails electricity and natural gas to residential, commercial, and industrial customers across 20 states in the United States and the District of Columbia.
VST operates through six segments: Retail, Texas, East, West, Sunset, and Asset Closure. VST is involved in electricity generation, wholesale energy purchases and sales, commodity risk management, fuel production, and fuel logistics management activities.
Vistra has an expected revenue and earnings growth rate of 15% and 10%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the last 30 days.
Spotify Technology S.A. (SPOT - Free Report) provides audio streaming services worldwide. SPOT operates through two segments, Premium and Ad-Supported. The Premium segment offers unlimited online and offline streaming access to its catalog of music and podcasts without commercial breaks to its subscribers.
The Ad-Supported segment provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its subscribers on their computers, tablets, and compatible mobile devices. SPOT also offers sales, distribution and marketing, contract research and development, and customer support services.
Spotify Technology has an expected revenue and earnings growth rate of 17.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the last 30 days.
Chewy Inc. (CHWY - Free Report) is engaged in the pure-play e-commerce business in the United States. CHWY provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its www.chewy.com retail Website, as well as its mobile applications.
CHWY has expected revenue and earnings growth rates of 5.5% and 39.1%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last seven days.
Barrick Gold Corp. (GOLD - Free Report) is expected to gain from the progress in key growth projects including Goldrush, the Pueblo Viejo expansion, Lumwana Super Pit and Reko Diq, which are likely to significantly contribute to its production.
GOLD continues to focus on high-return investments, particularly in Nevada, bolstered by successful exploration programs and ongoing project executions. The merger with Randgold also fortified GOLD’s position in the industry, now owning top-tier assets. The joint venture with Newmont provides additional upsides.
Barrick Gold has an expected revenue and earnings growth rate of 10.5% and 28.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last seven days.