The past couple years have been rough for tech stocks. Between pandemic-fueled volatility, supply chain issues, volatile inflation, and interest rate hikes, many of the high-flying Wall Street darlings just two years ago have crashed back down to earth. But now, the dust is finally starting to settle. While uncertainty still remains, some of these momentum stocks are making a comeback.
Unlike the hyped-up AI stocks dominating headlines today that seem ready to plateau, the tech momentum stocks I’m watching are just starting to take off. After deep sell-offs, they’ve established solid foundations and show early signs of regaining their momentum.
Of course, I’m still proceeding with caution. Momentum can disappear as quickly as it arrives. But by targeting companies with strong fundamentals and a bit of proven staying power, I think these three momentum stocks are set to deliver market-beating returns in the months ahead.
Mama’s Creations (MAMA)
Mama’s Creations (NASDAQ:MAMA) has been executing on its plan perfectly, and Wall Street has handsomely rewarded the company. Although the company’s valuation has ticked up 300% from its Dec. 2022 trough, I still think MAMA stock is far from overvalued. It trades at 25-times forward 2023 earnings, which is fair, given that analysts expect around double-digit top-line growth for this year and next year. Additionally, the company’s earnings per share growth is expected to be solid at 166.7% this year and 37.5% next year.
The company recently launched its new Mama’s Creations brand to expand its product offerings into international cuisine. This opens up new incremental opportunities and occasions like snacking and on-the-go meals. Mama’s Creations was well received at the 2023 International Dairy Deli Bakery Association trade show.
In addition, Mama’s Creations continues to cross-sell its core MamaMancini products into new grocery and mass retailer customers. The company now sells over six items per customer on average, up from 5 items last year. Improved marketing and a larger sales team in the works should accelerate this further. With strong execution and a reasonable valuation, Mama’s Creations still has room to run.
Evolution Petroleum (EPM)
Evolution Petroleum (NYSEMKT:EPM) has been performing exceptionally well, with its stock price climbing back to its 5-year high of $11 per share. Oil seems very strong right now, and impressively, EPM has zero debt. This means that EPM stock looks ultra cheap, especially when investors consider that EPM stock is trading hands at a forward price-earnings ratio of just 6-times. That’s despite the company’s impressive 43.5% top-line growth rate (year-over-year) in the March quarter, projected to be 21% for the entire year. Yes, that means growth is slowing, but it is still consistent on a linear basis.
The average Wall Street analyst targets $11 per share for EPM. However, Gurufocus’ model believes each stock would have a fair value of $18.70 by the second half of 2024. EPM also has a forward dividend yield of 5.4% to sweeten the deal.
With oil prices remaining resilient even amidst recession fears, EPM looks poised to continue surging. Cash flows are robust, enabling further acquisitions. Additionally, the company continues to return significant capital to shareholders via dividends and buybacks. For investors seeking oil exposure plus income, EPM stock hits the mark.
International General Insurance Holdings (IGIC)
Insurance businesses are among the most sticky in volatile environments. International General Insurance Holdings (NASDAQ:IGIC) did go through a shaky 2020 and 2022, but IGIC stock has been recovering impressively.
The company recently reported top line growth of 32%, and IGIC stock is now trading just shy of its peak of $10.61 in Jan. 2020, at the time of writing. I don’t think the party here is over yet, though, since IGIC stock only trades at a forward price-earnings ratio of just 4-times. It also pays a slight dividend, which yields 0.4%.
As another plus, this company has zero debt and an impressive net profit margin of 31.2%. Renewal rates remain positive, especially for the company’s reinsurance busienss. With solid underwriting discipline, IGIC seems ready to deliver steady gains in the months ahead. But as with all momentum stocks, you should be quick to cash out when you feel the time is right.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Omor Ibne Ehsan did not have (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.
