Ride the Momentum with These 5 Stocks

 | Aug 31, 2020 03:22AM ET

I know I tend to go on about the long term, and how we must be really careful about buying into a trend that could end real fast, especially since the market’s at unprecedented highs and sentiments are going through the roof.

But that’s basically one side of the story. It doesn’t mean that we must put all our money into stocks that we must hang on to forever. Not at all. The idea of long term buys, dividend stocks, etc is that we provide ourselves some sort of a buffer so we can absorb the volatility in riskier bets.

There are a couple of reasons why I think that we can and should make the most of the volatility in the market.

First among them are the improvement from the April lows ; and finally, data from the Bureau of Labor Statistics indicates that the employment situation is showing some improvement.

The one figure that seems disappointing is the consumer confidence index, which declined significantly from July to 84.2. This number is based on consumer expectations about the short-term outlook for income, business, and labor market conditions. But it’s important to remember that this preceded the Abbot announcement.

Abbot’s test kit, worth only $5 throws up a result in 15 minutes. What’s more, you don’t need a labor expensive equipment to get it done. It’s a simple swab test that anyone trained for the purpose could pull off. Abbott is planning 50 million tests a month by October. This means that all the places where we were afraid to frequent including restaurants, parks, etc, could be back in business. And that’s huge for employment, huge for sentiments and should be huge for the markets as well.

Vaccines only improve the situation further.

So yes, it’s riskier to trade the momentum when underlying market conditions aren’t so good. But when they are improving noticeably, and there are events lined up in the not-too-distant future that should further push that trend, we should make most of the opportunity.

So here, I’ve lined up some Zacks buy-ranked stocks that also have a Momentum Score A. And as a refresher, let me tell you, the Momentum Score indicates when it’s the right time to enter a trade to maximize your profits. So here goes-

Box, Inc. BOX

The company is a provider of a cloud content management platform for advertising, construction, consumer packaged goods, education, energy, financial services and insurance, government, healthcare and life sciences, high tech, legal, manufacturing, media and entertainment, and retail customers. The platform enables internal and external collaboration on content, automation of content-driven business processes, development of custom applications, data protection, security and compliance features.

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Zacks Rank #2 (Buy)

Industry: Internet – Software (top 50% of 250+ Zacks-ranked industries)

Growth Score A

Momentum Score A

Topped June quarter estimates by 38.5%

Both revenue and earnings for 2021 (ending January) and 2022 are expected to grow