5 Red Hot Momentum Stocks Making New Highs
Zacks Investment Research | Dec 06, 2016 05:50AM ET
Small caps are back in favor again this week with two days in a row of gains. Bullish sentiment surrounding the Trump trade is back in a big way. Investors have become very enthusiastic around small caps and given the composition of the Russell it’s no wonder the R2K has pushed higher by such a large margin. Financials make up over 20% of the index. The regional banks have done very well in the weeks following the election as rates on the long end of the curve have gone up.
In addition to that, investors believe investing in American businesses will boost the domestic economy and provide more fuel for the fire of the small banks. Companies borrowing from banks and investing in infrastructure projects could spark new, higher paying jobs and stoke inflation as well.
We don’t need to debate the long term effects of any of these policies right now. All we have to do to make money is uncover the hottest stocks and the hottest sectors of the market and go for a ride. Here I’ve put together a list of the best momentum stocks in the eyes of your Zacks Rank.
Arotech (ARTX)
Arotech Corporation provides defense and security products worldwide. The company operates in two divisions, Training and Simulation, and Power Systems. The Training and Simulation division develops, manufactures, multimedia and interactive digital solutions for engineering, use-of-force training, and operator training of military, law enforcement, security, emergency services, and other personnel. The Power Systems division provides electronics engineering and design, system integration, rapid prototyping, and vertically production services for military, aerospace, and industrial customers.
The stock has shot straight up from $2.30 in early November to over $4 today. The rally leapfrogged the previous 52-week high seen in April. Things are a little overcooked here with the commodity channel index (CCI) up at 146. I’d wait to see this cool off back to the zero line before thinking about pecking at this one.
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Braksem (BAK)
Braskem S.A., together with its subsidiaries, produces and sells thermoplastic resins. The company also imports and exports chemicals, petrochemicals, and fuels; produces, supplies, and sells utilities, such as water and industrial gases; and provides industrial services. Braskem S.A. was founded in 1972 and is headquartered in São Paulo, Brazil. Braskem S.A. is a subsidiary of Odebrecht S.A.
A huge surge from early August to late October saw the stock go from $11 to over $18 before letting up. The stock retraced about $3 of that move, coming down near $15 before the bids came back. December 2nd brought a healthy rally that pushed the stock up through the 20-day moving average, establishing an intermediate-term bullish trend.
BHP Billiton (LON:BLT) (BBL)
BHP Billiton Plc, together with its subsidiaries, operates as a resources company that discovers, acquires, develops, and markets natural resources worldwide. It operates through four segments: Petroleum, Copper, Iron Ore, and Coal.
This stock has been a slow and steady build when compared to the other stocks in this article. Rather than having a fierce breakout to the upside, BHP shares have been in a steady accumulation phase since mid-Summer. Support has been established along the 20-day several times along the ride. With shares butting up against fresh highs here I’m looking for a breakout above $34.50.
Suncor Energy (SU)
Suncor Energy Inc. operates as an integrated energy company. The company primarily focuses on developing petroleum resource basins in Canada's Athabasca oil sands; explores, acquires, develops, produces, and markets crude oil and natural gas in Canada and internationally; transports and refines crude oil; markets petroleum and petrochemical products primarily in Canada; and markets third party petroleum products. It operates in Oil Sands; Exploration and Production; Refining and Marketing; and Corporate, Energy Trading, and Eliminations segments.
Suncor shares were stock in a consolidation range from $26 to $29 for 6 months before peeking above the $29 in late October. After breaking through to the upside, that level provided support for the stock on the retrace in November. The buyers stepped in to take the stock even higher and the trend has been intact ever since.
Thor Industries (THO)
Thor Industries, Inc., through its subsidiaries, designs, manufactures, and sells recreational vehicles, and related parts and accessories primarily in the United States and Canada. It operates through Towable Recreational Vehicles and Motorized Recreational Vehicles segments.
Like the Mighty Thor himself this stock is bringing down the hammer. After hitting a 52-week high over $85 in late September, shares retreated to test $75 before catching another bid. A fantastic earnings report led to another huge jump after the November breakout. Now shares are north of $100 and climbing higher. With the CCI at 109, I’d wait for that indicator to come back to the zero line before getting back in the direction of the long term uptrend.
Bottom Line
Finding stocks breaking out to new 52-week highs is one thing. But if you can find stocks that are breaking on through on a technical basis that also have earnings estimates that keep moving in a positive direction, then you have a great chance on finding a momentum stock with plenty of room to keep on running. Here I’ve put together a list of the 5 top momentum stocks this week on Zacks.com.
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