Momentum stocks can be an investor’s best friend because these companies’ continued growth tends to reflect well in returns for their shareholders. Investors will be continually be attracted to these businesses for their potential growth strategies and consistent volume and popularity. Investors also look at stocks like Carvana (NYSE:CVNA), with its 1,000% increase in its share price year-to-date (YTD), and think — I want a piece of that potential.
These three companies below have all seen considerable rallies within the last year, primarily due to tweaking their business structure, restructuring their debt and implementing cost-cutting actions such as layoffs. These crucial steps and increased investor attention led these companies to receive massive share price appreciation.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) is primarily a social media company focusing on connecting individuals through a wide range of online platforms. They are also pioneers of the metaverse, an internet-based virtual reality platform. Meta Platforms was previously known as Facebook. The company changed its name in October 2021. Meta owns Instagram, a popular photo-sharing app; WhatsApp, a video-calling app; and Facebook Messenger, a social media messaging app.
Within the last year, the company saw an increase in its share price of approximately 108%. This increase is primarily due to the company’s restructuring, which includes a large layoff for Meta Platform and other tech companies to help with overall revenue growth and put more emphasis on generative AI technology.
Meta Platforms released its second-quarter earnings for 2023, which stated an increase in net income of 16% on top of revenue growth of 11% compared to the year before. The company’s Chief Financial Officer (CFO) Susan Li said Meta projects third-quarter revenue for 2023 to be between $32 billion and 34.5 billion.
Carvana (CVNA)
Carvana, based in Tempe, Arizona, operates an e-commerce platform that allows consumers to purchase used vehicles, view a wide range of eligible cars, sell and trade their vehicles and offer to finance.
Carvana has been on a hot streak recently, with shares up over 1,000% year-to-date (YTD). The company has seen quite a bit of attention lately from average retail investors and short sellers. CVNA’s short interest is just over 45%, which could spell bad or good news for the company due to the contained transient squeeze potential.
Carvana has had a large hill to climb since late 2022, when it saw share prices tumble to under $4. But, partly due to the company restricting its enormous debt and focusing on cost-cutting. The stock has continued to trend upward this year.
In the company’s most recent earnings reports, it still sees sticky earnings potential with a net loss that shrunk by 76%. And revenue that decreased by 24%. It also reported a much-improved metric of a 94% increase in top gross profit per unit sold for this current quarter compared to the year before.
Modine Manufacturing (MOD)
Modine Manufacturing (NYSE:MOD), headquartered in Racine, WI, provides thermal management products for various industries such as agriculture, automotive and industrials.
On August 2, Modine released its nearing desultory for the quarter on June 30, 2023. The company reported a net income increase that more than tripled and revenue that rose by 15% compared to the previous year. It also raised the outlook to a 6% to 11% increase in net earnings for fiscal year 2024.
Modine’s share price has grown by 197% in the last year. From consistent growth within its climate solutions and performance technology sectors, each saw revenue increases year-over-year — 11% and 18%, respectively.
The company is projected to see continued growth within fiscal year 2024. Its exposure primarily to the electric vehicle and data center markets makes it a continued momentum play for investors.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
