Hello all. Tim Melvin here and welcome to A Better Way to Wealth.
I thought I’d come to you this morning to give you a head start in today’s markets.
As traders, we generally like to look at the world through a couple filters…
One is buying assets and earnings at low multiples.
The other is price momentum.
Momentum is a long lasting anomaly that’s delivered market beating returns pretty much since the markets came into existence hundreds of years ago.
Often this can be a shorter timeframe than some strategies, but it does work.
That’s why today I want to bring you three of the best looking momentum stocks as we head into the new year.
If my predictions are correct, these are three stocks that very well could boost returns in your portfolio in the near future.
And remember, we’re looking for smooth upward momentum. That’s the direction we want to see the price moving on a stock chart.
That type of momentum doesn’t come from stories, it comes from fundamental momentum when earnings are getting better, sales are going up, margins are improving and institutions are starting to notice.
Fortunately, these stocks today all have twin momentum: fundamental momentum driving price momentum.
First up is Keysight Technologies (KEY).
Keysight is an electronic and communications test solutions company with a focus on providing such industry related tools as generators, wireless technology and network software.
Selling to network companies, defense companies, government agencies, semiconductor companies, electronic companies and educational institutions, Keysight has definitely made their name known in the industry and has taken the network bull by the horns, so to speak.
Long story short, anything that uses a network, that’s what this company is interested in. And I don’t need to tell you that networks are the backbone of today’s technology boom.
The company is doing everything they’re supposed to do. Earnings are looking growing, revenues are growing, they’re beating the analysts estimates (and making analysts raise their estimates).
All in all, powerful twin momentum appears to be happening at Keysight Technologies, and institutions are taking notice as cash continues flowing in on a daily basis.
All this provides that nice smooth up into the right momentum we’re looking for and suggests that this could be a great stock that certainly appears to have the strength to get your year off to a powerful start.
Next up is Fortinet Inc. (FTNT).
Fortinet is a leading cyber security company with a global presence, helping companies design firewalls, anti-malware, private networks, spam blocking, wireless cybersecurity and more.
With the world continuing to fight cyber attacks on what seems to be a daily basis, cyber security looks to definitely be the growth industry of the next several decades.
And it really doesn’t matter what the technology is. All innovations going forward will more than likely require some type of cyber security.
Artificial intelligence, self-driving cars, robotics, quantum computing, it doesn’t matter. If the network, the system and/or the data is not kept secure, it simply doesn’t work.
Simply put, the digital world we’re building doesn’t work if we fail to keep our systems safe, meaning companies like Fortinet will more than likely continue to see rapid growth in the years to come.
And that’s what’s happening here.
Demand for cybersecurity is driving momentum of sales, earnings, etc. Everything’s going right for this company, and it’s attracting institutional buying pressure on pretty much a daily basis.
This leads me to believe that Fortinet, along with the rest of the cybersecurity companies, will be stock market leaders for as long into the future as I dare try to look.
The third and final stock today is, actually, a surprise to me, but our momentum calculations and math speak for themselves.
It’s the company formerly known as Hewlett Packard, HP Inc. (HPQ)… A company with a focus on items such as printers, computers, imaging systems, laptops, etc. They sell to individuals through retail.
Most of us are familiar with this company and may even have a few of their items ourselves. Heck, even I’ve been a customer of theirs from time to time.
Besides personal computing services, they also have a major presence in the government, educational and healthcare markets and have seen a huge increase in revenue this year after last year’s “no business” environment that we were all subjected to during the COVID lockdowns.
Analysts are currently predicting to see steady growth in the high-teens from this company over the next five years, which shocked me. But as previously said, the math speaks for itself.
Sales and revenues are growing at a nice pace and continuing to beat the analysts expectations.
The coolest thing about this stock, though, is that it’s got positive momentum. It’s got twin momentum, meaning fundamental momentum driving price momentum.
It’s also a bargain based on earnings and cash flow, trading around eight times free cash flow when most of the market is trading at well above double that rate!
All this tells me that we could get an easy double out of this stock just based on multiple expansion as institutional dollars continue to flow into this stock and give us price momentum developed by fundamental momentum.
Now, twin momentum usually works extraordinarily well when you use it in tandem with buying earnings and assets on the cheap…
When this is done, great things can happen for an investor’s portfolio, and this stock is currently a chance for us to put both of those forces together to work for us all in one single stock.
The Wrap Up…
Well, there they are folks… My selections for today’s most promising tickers. Three upward moving stocks that look to have promising futures ahead of them.
Remember, trading is never a sure thing, but if we continue to work to think outside the box and stay ahead of the game, the possibilities could be endless!
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