Investors seeking to find that one stock with sustained momentum—one that not only shows upward movement but also avoids sudden slowdowns—need to consider several key factors. Identifying momentum in stocks involves analyzing patterns of consistent price increases, high trading volumes, and upward trends in technical indicators like moving averages. Here’s how you can recognize these traits and some promising stocks to watch right now.
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Key Indicators of Momentum Stocks
To spot a momentum stock, investors should focus on:
- Consistent Price Increases: Look for stocks that show a regular pattern of price gains over time.
- High Trading Volumes: Increased trading volume often accompanies price rises, indicating growing investor interest.
- Upward Trends in Technical Indicators: Key technical indicators such as moving averages are crucial. Momentum stocks frequently trade above their short-term moving averages (like the 50-day moving average) and sometimes even their long-term averages (like the 200-day moving average). This signifies sustained buying interest and confidence in the stock’s future performance.
Top Momentum Stocks to Watch
Based on current market trends, several stocks exhibit strong momentum. Here are three notable examples:
Celestica (TSX)
Celestica is a prime example of a momentum stock with no signs of slowing down. The company’s impressive financial performance highlights its strong market position. In Q2 2024, Celestica reported a 23% year-over-year increase in revenue, reaching $2.39 billion. This growth was largely driven by its Connectivity and Cloud Solutions (CCS) segment, which saw a 51% revenue increase compared to the previous year.
Celestica’s non-IFRS adjusted earnings per share (EPS) surged 65% year over year to $0.91, reflecting efficient revenue conversion into profit. The company has also raised its full-year 2024 outlook, projecting 19% revenue growth and 49% EPS growth compared to 2023. With a robust adjusted return on invested capital of 26.7% and strong cash flows, Celestica is well-positioned to maintain its growth momentum.
Aritzia (TSX)
Aritzia has shown impressive performance and growth, particularly in its recent fiscal quarter. In the first quarter of Fiscal 2025, the company reported a 7.8% increase in net revenue, reaching $498.6 million, primarily driven by a 13% increase in U.S. net revenue. This expansion in the U.S. market is a testament to Aritzia’s successful real estate strategy and increased brand awareness.
Additionally, Aritzia improved its gross profit margin by 510 basis points, indicating better cost management and profitability. Despite a slight dip in net income due to a non-recurring gain from the previous year, the company’s adjusted net income surged by 122.7%. With ongoing investments in digital initiatives and new boutique openings, particularly in the U.S., Aritzia appears well-positioned for continued growth.
Bombardier (TSX.B)
Bombardier continues to demonstrate robust financial performance, with significant growth in its second-quarter 2024 results. The company delivered 39 aircraft, generating $2.2 billion in revenue, with an 18% increase in services contributing to this strong performance. Bombardier’s resilience amid global supply chain challenges highlights its solid market position.
The company’s flagship Global 7500 business jet remains a standout performer, setting over 50 speed records in less than 50 weeks. With a growing order backlog of $14.9 billion and strong liquidity, Bombardier is well-positioned for continued growth, making it an attractive option for investors interested in the aerospace sector.
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Finding a stock with momentum involves analyzing price trends, trading volumes, and technical indicators. Celestica, Aritzia, and Bombardier are currently standout examples of stocks showing strong momentum and promising future performance. By focusing on these indicators and keeping an eye on these top picks, investors can better navigate the market and identify opportunities for growth.
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