12 Best Momentum Stocks To Invest In

Published on October 20, 2022 at 7:40 pm by Omer Farooq in Hedge Funds, News

In this article, we will look at the 12 best momentum stocks to invest in. If you want to explore similar stocks, you can also take a look at 5 Best Momentum Stocks To Invest In.

Momentum investing has long been a popular strategy among expert investors and retail investors alike. Simply put, momentum investors buy a stock when it is in an upward trend and sell it when it starts to look as if it has peaked or is going to go into a downward trend. Momentum investing is highly vulnerable to market volatility and may or may not turn out as expected. Investors should always practice proper due diligence and make informed investment decisions. The stock market has been shaky in 2022, with global supply disruptions, geopolitical unrest, alarmingly high inflation, and rising interest rates. As of October 20, the S&P 500 has declined 23.2% year to date, the Nasdaq is down 32.5% for the year, and the Dow has tanked 16.75% since the beginning of 2022.

While equities have been having a bad year, overall, market pullbacks may be optimal buying opportunities for investors. On October 20 Mark Newton, head of technical strategy at Fundstrat, appeared in an interview on CNBC where he gave his S&P 500 projections and talked about investing in stocks on pullbacks. Mark Newton thinks that “we need to see rates start to peak out before we can really see if any sort of rally has some longevity” and that though the “S&P seems like it’s going down every day, but there’s actually some internal sector strength that really bodes well with the prospect of markets to bottom out by the beginning of November”.

Mark Newton said that according to his research, interest rates are approaching a peak, and with the upcoming mid-term election and the FOMC meeting in November, markets are ready for a near-term rebound so “any pullbacks would still be a great buying opportunity” for investors.

Some of the best momentum stocks that have the potential to soar further as we move into the end of the year include Peabody Energy Corporation (NYSE:BTU), Occidental Petroleum Corporation (NYSE:OXY), and Alpha Metallurgical Resources Inc (NYSE:AMR). These, among other best momentum stocks, are discussed further in the article below.

Image by Sergei Tokmakov Terms.Law from Pixabay

Our Methodology

To determine the best momentum stocks to invest in, we screened for stocks that are up at least 30% for the year, as of October 20, and are expected to maintain this uptrend as we move into 2023. We narrowed down our selection to stocks that had positive market sentiment, upside potential, and were trading at attractive valuations. Along with each stock, we have mentioned the hedge fund sentiment, analyst ratings, and their year-to-date performance. We have ranked these stocks in ascending order of their year-to-date returns.

Best Momentum Stocks To Invest In

12. The Mosaic Company (NYSE:MOS)

YTD Return as of October 20: 29.46%

Number of Hedge Fund Holders: 50

The Mosaic Company (NYSE:MOS) is a leading global provider of concentrated phosphate and potash crop nutrients. At the end of Q2 2022, 50 hedge funds held stakes in The Mosaic Company (NYSE:MOS). The total value of these stakes amounted to $895.76 million. As of June 30, Soroban Capital Partners is the largest investor in The Mosaic Company (NYSE:MOS) and has stakes worth $317.74 million in the company.

On October 19, The Mosaic Company (NYSE:MOS) declared a quarterly cash dividend of $0.15 per share. The dividend is payable on December 15 to shareholders of record on December 1. As of October 20, the stock is offering a forward dividend yield of 1.18% and is trading at a PE multiple of 5x. The Mosaic Company (NYSE:MOS) is cash-rich and has free cash flows of $1.68 billion. The stock is one of the best momentum stocks to invest in right now and has gained 29.46% year-to-date, as of October 20.

On October 4, Citi analyst P.J. Juvekar revised his price target on The Mosaic Company (NYSE:MOS) to $58 from $61 and reiterated a Buy rating on the shares. The stock has an average price target of roughly $67, which implies a 31% upside from current levels.

Here is what Carillon Tower Advisers had to say about The Mosaic Company (NYSE:MOS) in its second-quarter 2022 investor letter:

“The Mosaic Company (NYSE:MOS) brought up the rear as fertilizer prices pulled back following a massive price spike due to the war in Ukraine and the resulting sanctions on Russia and Belarus, both major suppliers of potash fertilizers. Subsequently, fertilizer inventory began to accumulate in various locations including in Brazil as farmers refused to buy normal amounts of fertilizer due to high prices. An effort by the U.S. government to aid exports of Russian fertilizer also may have weighed on sentiment. We view the agriculture markets as still in a bull trend, but the pullback in Mosaic and other fertilizer names was substantial.”

Some of the best momentum stocks that have gained over 100% in 2022 include Peabody Energy Corporation (NYSE:BTU), Occidental Petroleum Corporation (NYSE:OXY), and Alpha Metallurgical Resources Inc (NYSE:AMR).

11. Archer Daniels Midland Company (NYSE:ADM)

YTD Return as of October 20: 31.39%

Number of Hedge Fund Holders: 42

Archer Daniels Midland Company (NYSE:ADM) is a leading food processing company that is also involved in trading agricultural commodities. As of October 20, Archer Daniels Midland Company (NYSE:ADM) has a trailing twelve-month PE ratio of 13.53 and has gained 31.39% since the beginning of the year.

Wall Street is bullish on Archer Daniels Midland Company (NYSE:ADM). This August, Wolfe Research analyst Sam Margolin took coverage of Archer Daniels Midland Company (NYSE:ADM) with an Outperform rating and a $117 price target. Margolin noted that the stock is offering “highly competitive dividend growth”. As of October 20, Archer Daniels Midland Company (NYSE:ADM) is offering a forward dividend yield of 1.82% and has free cash flows of $1.67 billion.

At the end of Q2 2022, 42 hedge funds were bullish on Archer Daniels Midland Company (NYSE:ADM) and held stakes worth $658.96 million in the company. This is compared to 42 positions in the previous quarter with stakes worth $625.68 million.

As of June 30, Markel Gayner Asset Management is the most prominent investor in Archer Daniels Midland Company (NYSE:ADM) and has stakes worth $113.5 million in the company.

Here is what Diamond Hill Capital had to say about Archer-Daniels-Midland Company (NYSE:ADM) in its first-quarter 2022 investor letter:

“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”

10. Corteva, Inc. (NYSE:CTVA)

YTD Return as of October 20: 32.92%

Number of Hedge Fund Holders: 42

Corteva, Inc. (NYSE:CTVA) is a leader in the agriculture industry and offers seeds, seed treatments, fungicides, herbicides, and insecticides among other products. The company has two divisions: Seed and Crop Protection. On October 4, Citi analyst P.J. Juvekar raised his price target on Corteva, Inc. (NYSE:CTVA) to $73 from $69 and reiterated a Buy rating on the shares.

As of October 20, Corteva, Inc. (NYSE:CTVA) is up 32.92% for the year and is one of the best momentum stocks to buy right now. Corteva, Inc. (NYSE:CTVA) has free cash flows of $1.1 billion and has a trailing twelve-month operating margin of 15.3%. As of October 20, Corteva, Inc. (NYSE:CTVA) is awarding shareholders with a forward dividend yield of 0.97%.

At the close of Q2 2022, 42 hedge funds were long Corteva, Inc. (NYSE:CTVA) and held stakes worth $966.4 million. As of June 30, Arrowstreet Capital is the largest investor in Corteva, Inc. (NYSE:CTVA) and has stakes worth $141.3 million in the company.

Here is what Aristotle Capital Management had to say about Corteva, Inc. (NYSE:CTVA) in its first-quarter 2022 investor letter:

“Corteva Agriscience, one of the world’s largest seed and crop protection companies, was a primary contributor for the quarter. Due to its respected brand and the value-added benefits of its patented seeds and crop protection solutions for farmers, Corteva has been able to more than offset input cost inflation with sustainable price increases. In addition, the company’s ongoing mix shift to higher-margin, premium products, a catalyst we previously identified, is aiding both sales and profit growth. Shares were likely also buoyed by the rise in crop prices. Market participants, perhaps eager to chase short-term trends, poured into the sector. At Aristotle Capital, we look past such gyrations and, as long-term investors, do not attempt to predict short-term changes in commodity prices. We remain excited about what we view to be high-quality characteristics and fundamental improvements that permeate Corteva’s business, not the least of which include its pricing power.”

9. CF Industries Holdings, Inc. (NYSE:CF)

YTD Return as of October 20: 48.35%

Number of Hedge Fund Holders: 52

CF Industries Holdings, Inc. (NYSE:CF) operates as an agricultural chemicals company worldwide and markets hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and industrial activities. On October 12, CF Industries Holdings, Inc. (NYSE:CF) declared a quarterly cash dividend of $0.40 per share of common stock. The dividend is payable on November 30 to stockholders of record on November 15. As of October 20, CF Industries Holdings, Inc. (NYSE:CF) is offering a forward dividend yield of 1.59% and has gained 48.35% year to date.

Wall Street sees material upside to CF Industries Holdings, Inc. (NYSE:CF). This October, Citi analyst P.J. Juvekar raised his price target on CF Industries Holdings, Inc. (NYSE:CF) to $120 from $117 and maintained a Buy rating on the shares.

At the close of Q2 2022, 52 hedge funds held stakes in CF Industries Holdings, Inc. (NYSE:CF). The total value of these stakes amounted to $1.33 billion. As of June 30, Soroban Capital Partners is the leading investor in CF Industries Holdings, Inc. (NYSE:CF) and has stakes worth $213.28 million in the company.

Here is what Carillon Carillon Tower Advisers had to say about CF Industries Holdings, Inc. (NYSE:CF) in its first-quarter 2022 investor letter:

“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. CF Industries (NYSE:CF) manufactures and distributes nitrogen fertilizer. The stock rose as Russia’s invasion of Ukraine accelerated already rising fertilizer prices.”

8. Exxon Mobil Corporation (NYSE:XOM)

YTD Return as of October 20: 64.12%

Number of Hedge Fund Holders: 72

At the close of the second quarter of 2022, Exxon Mobil Corporation (NYSE:XOM) was spotted on 72 hedge fund portfolios. These funds held collective stakes of $7.40 billion in the company. As of June 30, GQG Partners is the most prominent investor in Exxon Mobil Corporation (NYSE:XOM) and has stakes of over $4 billion in the company.

As of October 20, the stock has a trailing twelve-month PE ratio of 11.01 and is offering a forward dividend yield of 3.49%. Exxon Mobil Corporation (NYSE:XOM) is one of the best momentum stocks to buy now and, as of October 20, has gained 64.12% year to date.

This October, Wells Fargo analyst Roger Read adjusted his price target on Exxon Mobil Corporation (NYSE:XOM) to $109 from $116 and reiterated an Overweight rating on the shares. On October 18, Jefferies analyst Lloyd Byrne upgraded Exxon Mobil Corporation (NYSE:XOM) to Buy from Hold and raised his price target to $133 from $90.

Here is what First Eagle Investments had to say about Exxon Mobil Corporation (NYSE:XOM) in its second-quarter 2022 investor letter:

“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”

7. Marathon Oil Corporation (NYSE:MRO)

YTD Return as of October 20: 69.41%

Number of Hedge Fund Holders: 41

Marathon Oil Corporation (NYSE:MRO) is profitable, cash-rich, and undervalued. As of October 20, the stock is trading at a PE multiple of 6x and has gained 69.41%. Marathon Oil Corporation (NYSE:MRO) has a trailing twelve-month operating margin of 39.85% and has free cash flows of $3.45 billion. The stock is ranked high among the best momentum stocks to invest in right now.

Wall Street is bullish on Marathon Oil Corporation (NYSE:MRO). This October, Piper Sandler analyst Mark Lear raised his price target on Marathon Oil Corporation (NYSE:MRO) to $38 from $36 and reiterated an Overweight rating on the shares. On October 19, Jefferies analyst Lloyd Byrne took coverage of Marathon Oil Corporation (NYSE:MRO) with a Hold rating and a $30 price target.

At the end of Q2 2022, 41 hedge funds disclosed ownership of stakes in Marathon Oil Corporation (NYSE:MRO). These funds held collective stakes of $1.26 billion in the company. As of June 30, Fisher Asset Management is the top shareholder in Marathon Oil Corporation (NYSE:MRO) and has stakes worth $194.23 million in the company.

Here is what Carillon Tower Advisers had to say about Marathon Oil Corporation (NYSE:MRO) in its “Carillon Clarivest Capital Appreciation Fund” first-quarter 2022 investor letter:

“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Marathon Oil (NYSE:MRO) increased its quarterly dividend and executed an impressive share buyback that blew by the target it originally announced.”

6. Unum Group (NYSE:UNM)

YTD Return as of October 20: 71.38%

Number of Hedge Fund Holders: 25

Unum Group (NYSE:UNM) is an American insurance company that offers insurance products for disability, life, accident, critical illness, dental, and vision primarily in the United States. Wall Street sees upside to Unum Group (NYSE:UNM). This October, Truist analyst Mark Hughes raised his price target on Unum Group (NYSE:UNM) to $48 from $44 and maintained a Buy rating on the shares. It is one of the best momentum stocks to buy now and, as of October 20, has gained 71.38% since the beginning of 2022.

Unum Group (NYSE:UNM) is trading at bargain levels and is awarding investors with dividends. As of October 20, the stock has a trailing twelve-month PE ratio of 7.73 and is offering a forward dividend yield of 3.06%. The company has free cash flows of over $1.59 billion and has a trailing twelve-month operating margin of 13.13%.

Hedge funds are piling into Unum Group (NYSE:UNM). At the close of Q2 2022, Unum Group (NYSE:UNM) was spotted on 25 investment portfolios. These funds held stakes worth $436 million in the company, up from $323.5 million in the preceding quarter with 30 positions. As of June 30, Viking Global is the top investor in Unum Group (NYSE:UNM) and has stakes worth $146.6 million in the company.

In addition to Unum Group (NYSE:UNM), other stocks that are trading cheaply relative to earnings and are showing strong momentum include Peabody Energy Corporation (NYSE:BTU), Occidental Petroleum Corporation (NYSE:OXY), and Alpha Metallurgical Resources Inc (NYSE:AMR).

Click to continue reading and see 5 Best Momentum Stocks To Invest In.

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Published on October 30, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on November 16, 2024 at by Insider Monkey Staff

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