Momentum trading operates on the principle that strong stocks will continue their upward trajectory while weak stocks will keep declining. Therefore, I present momentum stocks ASE Technology Holding Co., Ltd. (ASX), Western Midstream Partners, LP (WES), and Navigator Holdings Ltd. (NVGS), which could be solid buys now. These stocks are currently trading above their 50-day and 200-day moving averages.
Inflation in the United States eased in May for a second straight month, a hopeful sign that an acceleration of prices that occurred early this year may have passed. Consumer prices rose 3.3% on a 12-month basis in May compared to 3.4% in April, according to data released by the Bureau of Labor Statistics.
Moreover, the Labor Department's June jobs report showed employers added 206,000 roles last month, down from May. On the other hand, workers' pay continues to rise, with average hourly earnings up 3.9% in June from the year before. The job market cool-down might induce the Fed to pivot on its tight monetary policy.
Hence, as the market anticipates the Federal Reserve will cut interest rates, this might be the time to invest in these quality high-momentum stocks.
ASE Technology Holding Co., Ltd. (ASX)
Headquartered in Kaohsiung, Taiwan, ASX provides semiconductor packaging, testing, and electronic manufacturing services in the United States, Taiwan, Asia, Europe, and internationally.
On May 29, 2024, ASX’s ASE Semiconductor announced the launch of powerSiP, an innovative power supply platform that can reduce signal and transmission losses while solving the current density challenge.
The powerSiP platform provided an option to place the voltage regulator directly under the SoC and chiplets, and vertical integration allowed a large current supply at a short power delivery path.
ASX’s trailing-12-month EBIT margin of 6.88% is 37% higher than the industry average of 10.08%. Its trailing-12-month Return on Common Equity and Return on Total Capital of 11.25% and 5.22% are 159.5% and 86.6% higher than the industry averages of 4.33% and 2.80%, respectively.
ASX’s total net revenues for the fiscal first quarter that ended March 31, 2024, increased 1.5% year-over-year to NT$132.80 billion ($4.10 billion). The company’s gross profit rose 7.9% from the year-ago quarter to NT$20.87 billion ($645 million).
Its net income attributable to shareholders of the parent stood at NT$5.68 billion ($175.62 million) and NT$1.28 per share.
For the quarter ending September 30, 2024, ASX’s revenue is expected to increase 8.6% year-over-year to $5.16 billion. Its EPS for the same quarter is expected to rise 56.6% year-over-year to $0.20.
ASX’s stock has soared 59.9% over the past year to close the last trading session at $12.20. The stock is currently trading above its 50-day moving average of $11.01 and 200-day moving average of $9.65, indicating an uptrend.
ASX’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Momentum and a B for Sentiment and Value. It is ranked #10 in the 92-stock Semiconductor & Wireless Chip industry.
Beyond what is stated above, we’ve also rated ASX for Growth, Stability, and Quality. Get all ASX ratings here.
Western Midstream Partners, LP (WES)
WES and its subsidiaries operate as a midstream energy company primarily in the United States. The company is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing of produced water.
In terms of the trailing-12-month gross profit margin, WES’ 71.09% is 59.9% higher than the 44.45% industry average. Likewise, its 42.66% trailing-12-month EBIT margin is 117.3% higher than the industry average of 19.63%. Furthermore, the stock’s 23.18% trailing-12-month Capex/Sales is 50.3% higher than the industry average of 15.43%.
WES’ total revenues amounted to $887.73 million, indicating a 20.9% year-over-year increase in the first quarter that ended March 31, 2024. For the same quarter, the company’s net income grew 187.9% year-over-year to $586.22 million, and net income per common unit rose 182.7% year-over-year to $1.47.
Analysts expect WES’ revenue for the second quarter (ended June 2024) to increase 29.3% year-over-year to $954.31 million. For the same quarter, the company’s EPS is expected to increase by 43% year-over-year to $0.92.
Shares of WES have gained 52.2% over the past year to close the last trading session at $41.15. The stock is currently trading above its 50-day and 200-day moving averages of $37.96 and $32.10, respectively.
WES’ POWR Ratings reflect bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
WES has an A grade for Quality and Momentum and a B for Growth and Stability. It is ranked #6 in the A-rated MLPs - Oil & Gas industry.
In addition to the POWR Ratings highlighted above, one can access WES’ ratings for Value and Sentiment here.
Navigator Holdings Ltd. (NVGS)
Based in London, the United Kingdom, NVGS operates a worldwide fleet of 56 liquefied gas carriers. The company provides transportation services for petrochemical gases, liquefied petroleum gases, and ammonia to energy companies and industrial users. It also offers ship-shore infrastructure and consultancy services.
NVGS’ trailing-12-month gross profit margin of 55.66% is 25.2% higher than the industry average of 44.45%. Its 45.19% trailing-12-month EBITDA margin is 31.2% higher than the 34.43% industry average.
In the first quarter ended March 31, 2024, NVGS’ operating revenues and operating income increased 3.8% and 13.9%, respectively, from the previous-year quarter to $121.02 million and $36.31 million. Moreover, its net income and adjusted EBITDA amounted to $24.92 and $74.14 million, respectively, up 32.2% and 7.4% year-over-year.
Analysts expect NVGS’ revenue for the quarter ended June 2024 to increase 2.4% year-over-year to $117.22 million. Its EPS is expected to rise 42% year-over-year to $0.36. Moreover, it has surpassed the revenue estimates in three of the trailing four quarters.
Over the past three months, the stock has gained 11.9%, closing the last trading session at $16.97. The stock is currently trading above its 50-day and 200-day moving averages of $16.70 and $15.37, respectively.
NVGS’ strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
NVGS has an A grade for Momentum and a B for Sentiment, Quality, and Stability. The stock is ranked #12 out of 42 stocks in the A-rated Shipping industry.
Click here to access the additional NVGS ratings (Growth and Value).
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
ASX shares were trading at $12.56 per share on Thursday afternoon, up $0.36 (+2.95%). Year-to-date, ASX has gained 36.29%, versus a 17.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
The post 3 High-Momentum Stocks to Ride the Market Wave appeared first on StockNews.com