Momentum stocks have been surprisingly strong performers over the years. It can seem counterintuitive at first. After all, investors often aim to buy low and sell high. But sometimes, the best prospects lie in a stock that is already making highs and set to keep on climbing.
As the physics adage goes, “an object in motion stays in motion”. The same often holds true for momentum stocks with strong fundamentals. The good news is that some momentum stocks, despite their strong rallies, are selling at attractive valuations as well. All three of these following momentum stocks made new 52-week-highs this week and have plenty more gas left in the tank.
Toyota Motor (TM)
Toyota Motor (NYSE:TM) has seen its shares run up to new 2023 highs over the past couple of months. Much of this came after Goldman Sachs called Toyota an “electric vehicle market sleeper” pick in August. The analysis sees Toyota ending up with more than 10% of the total electric vehicle market in 2030.
Most of the excitement in the automotive space is around new electric vehicle makers. And it’s understandable that traders are gravitating to dynamic firms like VinFast Auto (NYSE:VFS) that have come onto the scene with a bang.
However, we shouldn’t forget about the legacy automakers either. They have tremendous operational scale, powerful brands, and worldwide reach. In addition, they’ve quietly been making forward-looking investments in electric vehicles and next-generation technologies as well.
In the meantime, Toyota is incredibly profitable. TM stock is up 25% over the past year. Even with that rally, shares still sell for less than 10 times forward earnings. With the economy hanging in there, Toyota shares could keep riding higher for quite a while.
Grupo Aeroportuario del Centro (OMAB)
Grupo Aeroportuario del Centro (NASDAQ:OMAB) is a Mexican airport operator focused on properties in the northern part of that country. Its flagship property is the Monterrey, Nuevo Leon airport, which serves an urban area of more than five million people.
Industrial activity has exploded in activity in the state of Nuevo Leon since the onset of the pandemic as firms move manufacturing capacity from China to Mexico. Tesla Motors (NASDAQ:TSLA) was one of the latest to set up shop in Mexico, with it announcing plans for a $5 billion manufacturing facility in Monterrey. It’s not just Tesla; we’ve seen tons of announcements from the food & beverage, packaging, steel, and industrial goods sectors around new Monterrey plants recently as well.
OMAB stock has been taking flight this year. Its passenger traffic is growing more than 20% year over year (YOY) and revenues even faster. So it comes as no surprise that investors are bidding up this leading Mexican logistics and infrastructure play amid the wave of manufacturing. OMAB stock is up more than 70% over the past year. Even so, with earnings also climbing quickly, shares still go for just a 17x forward P/E ratio.
Phillips 66 (PSX)
Phillips 66 (NYSE:PSX) is one of the nation’s largest oil refining and distribution businesses. Formed by a spin-off from ConocoPhillips (NYSE:COP), Phillips 66 has blossomed into a large and successful independent enterprise.
And, lately, it’s a great time to be a refining company. The U.S. hasn’t built any new, large oil refineries in more than 40 years, with the last unit of significant downstream capacity coming online in 1977. However, as product demand has increased and the U.S. has also produced more oil from fracking, this has led to a favorable supply/demand dynamic and improved profit margins for the refining industry.
In 2022, the industry produced windfall profits. Phillips 66 has put up a stunning $23/share in earnings over the past year, leaving at just six times trailing earnings.
Analysts had been modeling a sharp drop in earnings going forward thanks to weakening demand and a slowing economy. However, the energy sector is picking up steam once again this fall as it appears prices will stay higher for longer. This could lead Phillips 66 to continue generating strong results. PSX stock is rallying as traders factor in the possibility that the company will continue to produce gushers of income going forward.
On the date of publication, Ian Bezek held a long position in OMAB stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
