In this article, we discuss the 8 best momentum stocks to invest in right now along with the latest jobs report and its impact on the market.
U.S. Labor Market Remains Resilient
After the Fed’s rate cut and a positive inflation report, the latest jobs report also showed better-than-expected results. In an interview with Yahoo Finance, Elise Gould from the Economic Policy Institute discussed the latest employment data as she highlighted the continued strength of the U.S. labor market.
Payroll employment increased by 254,000 in September, with revisions adding 72,000 jobs from previous months. The unemployment rate remained stable at 4.1% and showed declines among various demographics, especially among men.
Gould emphasized that the prime-age employment-to-population ratio is at a 23-year high, which shows a strong economy. Despite wage growth reaching 4%, she downplayed concerns that this could lead to inflation and mentioned improvements in productivity and a low labor share of corporate income.
She expressed confidence in the labor market’s strength and suggested that it may influence the Fed’s decisions on interest rates. She also believes that the Fed should normalize rates, which remain high historically given current employment levels.
Gould observed that the overall labor market is strong, but not excessively heated, as shown by softer job turnover rates.
Economic Resilience and Its Impact on the Stock Market
At CNBC’s Closing Bell, Wharton finance professor Jeremy Siegel discussed the impact of the recent economic data on the stock market. He noted that while 550,000 jobs were added in the third quarter, wages remained flat, leading to a GDP growth projected at 2.5% to 3%.
Siegel believes that the Federal Reserve will likely implement smaller rate cuts of 25 basis points rather than larger cuts and will aim for a long-term neutral rate of about 3.5% by the second half of next year.
He expressed optimism regarding the stock market and suggested that the S&P 500 could reach 6,000 by year-end. However, he mentioned that higher yields may present challenges.
Despite concerns about equity valuations appearing high, Siegel pointed out that with cash still abundant and a resilient economy, the market remains attractive. He acknowledged that while the forward earnings ratio for the market is around 21.5x, it is not expensive in the current economic climate. He emphasized the absence of recession indicators and the potential for earnings growth and suggested that while significant market gains may not be expected, there is still room for growth.
With that, we look at the 8 Best Momentum Stocks To Invest In Right Now.
8 Best Momentum Stocks To Invest In Right Now
Our Methodology
For this article, we looked at the October 2 holdings of iShares MSCI USA Momentum Factor ETF and narrowed our list to 8 stocks most widely held by institutional investors. The best momentum stocks to invest in are listed in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Best Momentum Stocks To Invest In Right Now
8. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders: 89
The Progressive Corporation (NYSE:PGR) is an American insurance company headquartered in Ohio. It is the largest motor insurance provider in the U.S. and offers coverage for a wide range of vehicles, including passenger cars, motorcycles, and commercial vehicles, as well as home and life insurance.
It operates through three segments. The Personal Lines segment includes agency and direct businesses. The Commercial Lines segment offers primary liability and physical damage coverage for vehicles used by small businesses. The Property segment provides insurance for homeowners, property owners, and renters.
On September 17, Goldman Sachs increased its price target for Progressive’s (NYSE:PGR) stock from $262 to $280 and maintained a Buy rating. The firm updated its financial model due to better expectations for the growth rate of the company’s policies and improved loss ratios in personal auto insurance.
However, these improvements are partially balanced out by an increase in expected expenses related to personal lines insurance. As a result, Goldman Sachs has raised its earnings-per-share predictions for 2024, 2025, and 2026 by 13%, 3%, and 3%, respectively. The significant increase for 2024 is mainly due to the company’s better-than-expected earnings reported in August.
Progressive (NYSE:PGR) is expected to report a significant increase in its EPS for 2024. The median average EPS for the company is expected to be $13.08, which shows a 115% year-over-year growth. It is the 8th-best momentum stock on our list.
Parnassus Investments stated the following regarding The Progressive Corporation (NYSE:PGR) in its first quarter 2024 investor letter:
“The Progressive Corporation (NYSE:PGR) shares appreciated as investors reacted well to the insurer’s latest financials, including higher-than-expected-growth in net premiums. The company’s consistently profitable underwriting, scale advantages and strong execution are becoming more evident to investors as it continues to gain market shares.”
7. Vertiv Holdings Co (NYSE:VRT)
Number of Hedge Fund Holders: 92
One of the best momentum stocks, Vertiv Holdings Co (NYSE:VRT) is a major American provider of critical infrastructure services for data centers and communication networks. Its primary customers include tech giants like Alibaba and AT&T, and it focuses on developing innovative cooling solutions through partnerships with companies like Nvidia and Intel.
The company serves over 750,000 customer sites, including over 70% of Fortune 500 companies, and does business in over 130 countries. It operates 24 manufacturing and 19 customer experience centers and holds around 2,740 patents, with over 770 pending applications, which shows its commitment to innovation. The company is constantly expanding and innovating.
On September 24, Vertiv (NYSE:VRT) announced the opening of a new manufacturing facility in Pelzer, South Carolina, to improve its North American operations. The 215,000-square-foot facility is expected to create up to 300 skilled jobs and will focus on producing integrated modular solutions, modular power systems, and other infrastructure technologies for data centers. These prefabricated systems are designed to reduce labor needs and accelerate data center deployment.
The CEO of the company said that this expansion is important to meet the growing demand for integrated solutions, especially with the rise of AI applications. The Pelzer site complements the company’s existing operations, including a switchgear and busbar facility in Anderson, South Carolina, and supports broader manufacturing capacity across many locations, including the U.S., Mexico, Europe, and the UAE.
On October 2, Vertiv (NYSE:VRT) launched its EnergyCore battery cabinets, which are designed to address the growing demand for high-density computing in data centers. The cabinets, which come pre-assembled with Lithium-Iron-Phosphate battery modules and an integrated battery management system, are compatible with a variety of the company’s uninterruptible power supply (UPS) systems, including the newly introduced Trinergy and Liebert APM2 models.
The company aims to meet the growing energy storage needs of AI and high-performance computing applications with this new product.
Baird Mid Cap Growth Equity Strategy stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its Q2 2024 investor letter:
“We made several adjustments to our technology sector mix. We also added Manhattan Associates and Vertiv Holdings Co (NYSE:VRT). Vertiv is a power equipment company benefitting from secular growth in data center spending and in artificial intelligence-driven thermal management solutions.”
6. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 92
Vistra Corp. (NYSE:VST) is a prominent integrated retail electricity and power generation company that serves customers across the United States and ranks among the largest competitive power generators in the country. It ranks at 6 on our list of best momentum stocks.
The company has a capacity of about 41,000 megawatts, which is enough to power 20 million homes. It focuses on energy transformation through a diverse portfolio that includes natural gas, nuclear, coal, solar, and battery storage. It operates the second-largest fleet of nuclear power plants in the U.S. and focuses on sustainability by expanding its zero-carbon resources.
The company also adopts a customer-centric approach as it offers over 50 renewable energy plans to around 5 million retail customers. Vistra (NYSE:VST) aims for a 60% reduction in greenhouse gas emissions by 2030 and targets net-zero emissions by 2050.
The company is further expanding its portfolio by acquiring the remaining 15% equity interest in Vistra Vision LLC, currently held by Nuveen and Avenue, for a total cash purchase price of $3.248 billion. Vistra Vision LLC owns nuclear facilities like Beaver Valley, Comanche Peak, Davis-Besse, and Perry, totaling about 6.4 gigawatts in capacity.
In July, the company secured important regulatory approval to extend the Comanche Peak Nuclear Power Plant’s operational lifespan to 2053, which adds 20 years to its initial licenses. The facility, which has been operational since 1990, consists of two units with a combined capacity of 2,400 megawatts, and has produced over 582 million megawatt-hours of clean electricity.
Vistra (NYSE:VST) has been one of the top gainers of the S&P 500 in 2024 which has gained nearly 250%, as of October 3. The company has been justifying its stock price gains with its performance.
In Q2, despite lower wholesale energy prices, the company’s diversified portfolio achieved record power production and solid retail growth. The company reaffirmed its 2024 adjusted EBITDA guidance of $4.550 billion to $5.050 billion and projected potential benefits from the nuclear production tax credit.
For 2025, the company raised its estimated adjusted EBITDA midpoint range by $200 million due to favorable market conditions and hedging strategies. It is also a shareholder-friendly company that has returned about $5 billion to investors since late 2021. Vistra (NYSE:VST) plans to continue share buybacks of at least $2.25 billion through 2025.
Fidelity Growth Strategies Fund stated the following regarding Vistra Corp. (NYSE:VST) in its Q2 2024 investor letter:
“An overweight stake in utility company Vistra Corp. (NYSE:VST) (+24%) was the top individual relative contributor. In Q1, the Texas-based independent power producer completed its acquisition of Ohio-based nuclear fleet operator Energy Harbor. The new Vistra, with its expanded geographic footprint, is in strong position to gain from the buildout of AI-capable data centers, which require enormous amounts of power to run. It is expected that local grids in the U.S. will need to invest heavily over the coming years to improve their power infrastructure and meet growing demand. In the nearer term, firms may choose to contract with independent power producers, like Vistra, rather than rely on the local provider.”
5. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 95
Walmart Inc. (NYSE:WMT) is a global omnichannel retailer with operations in approximately 20 countries and serves 255 million customers weekly across 10,500 stores and eCommerce platforms. It is one of the best momentum stocks to invest in.
The company operates stores in various formats including supercenters, discount stores, neighborhood markets, and Sam’s Club. Internationally, its formats are more diverse and include supermarkets, hypermarkets, cash-and-carry stores, and specialty stores among others.
Its innovations in e-commerce, like Curbside Pickup and Walmart+, create seamless shopping experiences that blend with physical and digital retail. The company’s distribution network and private fleet efficiently support its vast supply chain, while its fulfillment centers ensure quick delivery for online orders.
On September 27, Baird analyst Peter Benedict maintained a Buy rating on Walmart (NYSE:WMT) and raised its price target to $90 from $82. The price target revision came in light of the company’s effective transformation into an omnichannel retailer, which has led to increased market share and improved service offerings that attract diverse customer demographics.
The analyst believes that the company is gaining market share in omnichannel retail while also seeing growth in its alternative revenue streams.
Earlier on September 24, Truist upgraded the company shares from Hold to Buy and raised the price target to $89 from $76.
According to Insider Monkey’s database of 912 hedge funds, 95 hedge funds had stakes worth $9.19 billion in Walmart (NYSE:WMT) in Q2. While Fisher Asset Management is the company’s largest shareholder as of June 30, a more significant transaction was seen by GQG Partners. The firm increased its holdings in the company by a whopping 30279% to $1.1 billion in the quarter to become the second largest shareholder, according to our database.
4. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 100
Eli Lilly and Company (NYSE:LLY) is an American pharma company headquartered in Indiana. The company is widely recognized for its development of medications, including the antidepressants Prozac and Cymbalta, and diabetes treatments like Humalog and Trulicity.
It was the first company to mass-produce the polio vaccine and human insulin using recombinant DNA technology. Its recent focus includes diabetes, obesity, Alzheimer’s, and autoimmune diseases. The company ranks at 4 on our list of best momentum stocks.
On September 13, Eli Lilly (NYSE:LLY) announced that the U.S. Food and Drug Administration has approved EBGLYS (lebrikizumab-lbkz) for treating moderate-to-severe atopic dermatitis in adults and children aged 12 and older who do not respond well to topical treatments. The new biologic medication offers a significant treatment option for patients struggling with severe eczema symptoms, such as persistent itching and skin irritation.
Recent studies reveal that EBGLYSS provides long-lasting disease management for over 80% of adults and adolescents suffering from moderate-to-severe atopic dermatitis. The findings come from the extended ADjoin study, which tracked participants for up to three years.
About 87% of patients were able to achieve and sustain clear or nearly clear skin without relying on high-potency topical corticosteroids or systemic therapies during the study.
Furthermore, the safety profile observed after three years was consistent with earlier two-year results, with the majority of reported adverse effects categorized as mild or moderate.
Eli Lilly (NYSE:LLY) also announced a significant $4.5 billion investment to establish the Lilly Medicine Foundry in Lebanon, Indiana, aimed at advancing drug manufacturing and development. The facility will integrate research and manufacturing processes, which will improve the company’s capacity to produce clinical trial medicines while exploring new production techniques.
The project will generate approximately 400 high-skilled jobs and strengthen the company’s commitment to Indiana, where it has invested over $13 billion. The state will provide infrastructure support and economic incentives to facilitate this initiative.
On October 3, TipRanks reported that Deutsche Bank analyst James Shin reaffirmed a Buy rating for Eli Lilly (NYSE:LLY) with a price target of $1,025. He highlighted the resolution of the Tirzepatide supply shortage, classified by the FDA as “resolved,” which is expected to lead to an increase in shipments in the latter half of 2024.
The increase aligns with strong market demand, supported by data from the American Society of Health-System Pharmacists and IQVIA. Shin also pointed to strong sales growth for the company’s Mounjaro and Zepbound drugs, which are contributing positively to revenue. With supply issues resolved, the focus shifts to a more fundamental assessment of Eli Lilly’s (NYSE:LLY) growth potential, which improves investor confidence in the company’s future performance.
PGIM Jennison Health Sciences Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q2 2024 investor letter:
“Eli Lilly and Company (NYSE:LLY) is a diversified biopharmaceutical company with core franchises in Diabetes, Obesity, Immunology, Neurodegeneration, and Oncology. The company is one of the two global leaders in diabetes with blockbuster products in Trulicity and recently launched Mounjaro (tirzepatide) to serve this large underserved market. To date, the Mounjaro launch is the strongest for any diabetes drug ever launched, which we attribute to off label usage in the obesity indication as well as on label use in diabetes. We believe the tirzepatide (the generic name for Mounjaro) franchise is also uniquely positioned to grow substantially from here thanks to its recent approval for obesity. To that note, in late 2023, Eli Lilly received approval for tirzepatide in obesity and is commercializing it for obesity under a new brand name, Zepbound. While still early in the launch, uptake has been extremely strong, exceeding that of both Wegovy and Mounjaro at the same timepoint in their launches. While Alzheimer’s Disease has been a tough market for drug developers, Eli Lilly has breakthrough designation from the food and drug administration (FDA) for donanemab and recently presented Phase III pivotal trial data that positions donanemab as the most efficacious drug in the class. In June, the FDA advisory committee voted unanimously in favor of donanemab as an effective treatment where the benefits outweigh the risks, praising the therapy as innovative. Donanemab was then approved under the brand name Kisunla in early July. Eli Lilly also has exciting franchises in dermatology, immunology, and oncology that are starting to add meaningfully to growth. With a proven history of strong commercial execution and one of the highest research and development (R&D) success rates in the industry, we see opportunity for continued success. With a lack of meaningful patent expirations for the rest of the decade. Eli Lilly is uniquely positioned amongst its larger-cap peers. Recent positive performance has been driven by the continued strong growth of Mounjaro and Zepbound, which led to a big guidance raise on the 1Q call, an unusual action for Eli Lilly this early in the year, which speaks to their confidence in the strong trends they are seeing.”
3. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 111
JPMorgan Chase & Co. (NYSE:JPM) is one of the largest banking institutions in the United States. It operates in several areas including asset and wealth management, commercial banking, consumer and community banking, corporate and investment banking, and technology. Moreover, it operates in over 100 global markets.
The firm recently launched Quest IndexGPT, a set of stock indices for institutional investors that uses OpenAI’s GPT-4 model to generate keywords related to specific themes. The keywords help identify relevant companies and construct thematic indices in sectors like AI and renewable energy. It was developed by the Commercial & Investment Bank Strategic Index Structuring team and is the firm’s first product using LLM technology.
As per The WallStreet Journal, JPMorgan Chase (NYSE:JPM) plans to open nearly 100 new branches in low-income areas across the U.S. The branches will offer standard banking services and spaces for small businesses and financial literacy workshops. The CEO, Jamie Dimon emphasized that this initiative combines community support with business strategy, aiming to enhance customer engagement and deposits.
The bank is hiring 75 community managers to build trust and partnerships in these neighborhoods. Previous community branches have already shown increased personal savings and checking accounts. The initiative seeks to address historical banking challenges in underprivileged areas and includes hosting events to improve financial literacy and trust in banking.
According to the Insider Monkey database of 912 hedge funds, JPMorgan Chase’s (NYSE:JPM) stock was held by 111 hedge funds, which brings the company to the third spot on our list of best momentum stocks.
Carillon Tower Advisers Carillon Eagle Growth & Income Fund stated the following regarding JPMorgan Chase & Co. (NYSE:JPM) in its first quarter 2024 investor letter:
“JPMorgan Chase & Co. (NYSE:JPM) contributed positively to performance following solid financial results and positive guidance for the remainder of 2024. Moreover, growing chatter around rising capital markets activity likely contributed to the stock’s strong performance relative to other banks. Recall that JPMorgan has a robust capital markets franchise.”
2. Broadcom Inc. (NASDAQ:AVGO)
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) is a California-based company that designs, develops, manufactures, and supplies semiconductor and infrastructure software products globally. The company has a foot in a range of industries and works on solutions for broadband Wi-Fi AP, data centers, financial services, enterprise security, broadband access, and automotive.
The company has products ranging from networking devices and optical technologies to enterprise security software under the Symantec brand. In 2023, it completed the transaction to acquire cloud computing and virtualization technology company, VMware LLC. According to Broadcom (NASDAQ:AVGO), its infrastructure software segment, which is largely fueled by VMware’s performance, generated $5.8 billion in revenue in fiscal Q3, representing a 200% increase compared to the previous year.
The company highlighted that VMware’s transformation is progressing well, with significant growth in VMware Cloud Foundation bookings, representing 80% of VMware products booked in the quarter. This resulted in an annualized booking value of $2.5 billion, up 32% from the prior quarter.
The company’s overall Q3 earnings show strong growth and resilience in the face of market fluctuations. It achieved consolidated net revenue of $13.1 billion, a remarkable 47% increase year-over-year, with an operating profit of $7.9 billion, up 44%.
Broadcom (NASDAQ:AVGO) projects Q4 revenue of approximately $14 billion, which would be a 51% increase year-over-year, and forecasts adjusted EBITDA to reach 64% of revenue. These results show its strategic positioning in high-demand markets, especially in AI and infrastructure software.
It is the 2nd best momentum stock on our list and is also one of the most important AI stocks according to BlackRock. It is quite popular among institutional investors as recently Mar Vista Investment Partners said in its Q2 investor letter that the company is positioned to capitalize on the rising demand for custom AI accelerator chips in the generative AI sector. As the second-largest manufacturer of these chips after Nvidia, it specializes in custom AI ASICs and serves major hyper scalers like Alphabet and Meta, who appreciate its performance and cost efficiency. The company is expected to benefit from a multi-year capital cycle as hyperscalers invest in AI infrastructure.
Additionally, Parnassus Investments stated the following regarding Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter:
“During the second quarter, the Fund’s overweight position in the Information Technology sector decreased slightly as we sold our position in Cisco Systems and used most of the proceeds to buy Broadcom Inc. (NASDAQ:AVGO), a leading semiconductor company and provider of custom silicon products. Both stocks provide similar exposure to networking technology, but we believe Broadcom offers more upside from AI infrastructure spend and defensiveness due to its software assets.
Broadcom, a leader in semiconductor and infrastructure software, offers promising AI upside via data center ethernet and custom ASICs and can benefit if the iPhone’s new AI features gain traction this year. Additionally, the strength of its enterprise software assets in VMware, Symantec and CA Technologies could provide defensiveness if enterprise IT spending continues to be muted.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 179
NVIDIA Corporation (NASDAQ:NVDA) is a leading company in the technology sector, well known for its work in graphics processing units (GPUs) and artificial intelligence. Originally focused on enhancing the gaming experience, the company revolutionized computer graphics with the release of its GPU in 1999, which significantly improved both video game performance and 3D applications.
Over the years, the company diversified its offerings to include central processing units (CPUs), data processing units (DPUs), and various software solutions for high-performance computing and deep learning. The company now operates in industries ranging from gaming and professional visualization to data centers, automotive, and healthcare. The company tops our list of best momentum stocks.
A major upcoming product from NVIDIA (NASDAQ:NVDA) is the Blackwell line, expected to drive considerable revenue and bring innovations to the industry. With improvements in supply chain conditions, orders for Blackwell products are increasing. CEO Jensen Huang has confirmed that the company is ramping up Blackwell GPU production and aims to begin shipments by the fourth quarter. While some engineering issues may delay certain releases, the company remains on course to scale up production as it moves forward into the next year.
The company is expected to benefit from significant growth driven by the AI-driven data center expansion. At the GPU Technology Conference in March 2024, CEO Jensen Huang estimated annual spending on data center infrastructure at around $250 billion, potentially reaching between $1 trillion and $2 trillion over the next decade.
While the company will face competition from companies such as AMD and AI accelerators developed by Google, Amazon, and Apple, analysts expect NVIDIA’s (NASDAQ:NVDA) data center market share between 2025 and 2029 to exceed $950 billion. Despite the competition, the company is expected to be the dominant force in the market.
NVIDIA (NASDAQ:NVDA) also recently introduced its new series of multimodal large language models, NVLM 1.0, which performs at the highest level on both vision-language and text tasks.
According to the company, it competes with top proprietary models like GPT-4o and open-access ones such as Llama 3-V 405B and also improves on text-only tasks after multimodal training. The model weights and training code are being made open-source through Megatron-Core.
The model excels in various multimodal tasks, such as following instructions, recognizing humor, reasoning, and solving math problems step-by-step. It uses a hybrid architecture that improves training efficiency and accuracy, along with a unique 1-D tile-tagging design for high-resolution image tasks.
The company’s LLM stands as a new major competitor in the industry that META and Alphabet dominated.
Generation Investment Management stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“Recent net performance is behind market averages. However since the fund’s inception, we have spent only about 8% of the time underperforming on a rolling five-year basis.1 We do not enjoy these spells. A number of different factors has contributed to the current period of underperformance. The fact that we do not own NVIDIA Corporation (NASDAQ:NVDA) is one. That single company accounted for roughly 25% of returns in the benchmark so far this year, meaning almost everyone who does not own Nvidia has lost out. Year-to-date, not owning Nvidia explains about a third of our relative underperformance.
Nvidia is, clearly, an earnings juggernaut. In the past year its revenue has more than tripled, as cloud companies load up on hardware to power AI models. So while its earnings multiple has increased, we are not seeing a repeat of the dotcom mania of the late 1990s. This company’s valuation is backed by cold, hard cash…” (Click here to read the full text)
While we acknowledge the potential of NVIDIA Corporation (NASDAQ:NVDA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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