You’ve probably heard it while watching sports or listening to pundits talk about the horse race in a tight election. When a team or a candidate is doing well, the talk shifts to momentum. But when you’re considering top-rated stocks, how does momentum factor in?
In short, positive momentum is the rate that a stock price is moving higher. The momentum itself calculates the stock’s moving average based on its historical price.
Top-rated stocks with strong momentum are increasing in price over a faster-than-expected period. Investors are buying in and hoping that the ride continues.
When momentum starts building in a stock, other investors often buy as well, creating a self-reinforcing cycle that pushes the stock price higher.
And on the downside, when seemingly top-rated stocks lose favor and momentum, their prices will fall faster than expected.
My Portfolio Grader tool can help here. It ranks stocks on an “A” through “F” scale and gives stocks a grade based on their earnings momentum. Stocks that have an excellent earnings momentum grade are seeing their earnings exceed expectations.
Here are seven of these top-rated stocks to buy now.
|TTD||The Trade Desk||$66.82|
|TME||Tencent Music Entertainment||$7.81|
The Trade Desk (TTD)
The Trade Desk (NASDAQ:TTD) is among the top-rated stocks in the tech advertising business.
The company offers a self-service platform that allows advertisers to manage and optimize their digital marketing efforts. It works on various platforms, including connected TV, video, audio, mobile and display.
The company’s earnings report for the first quarter exceeded nearly everyone’s expectations. Revenue of $382.8 million was better than analyst estimates for $364.5 million. Earnings per share of 23 cents was roughly double what the Street expected.
“Our strong start to the year is testament to the increasing value that marketers place on objective, transparent, data-driven media buying on the open internet,” CEO Jeff Green said.
TTD stock is up 50% so far in 2023. The Trade Desk has an earnings momentum grade of “A” and a “B” overall rating from the Portfolio Grader.
E-commerce platform Shopify (NYSE:SHOP) thrilled investors when it reported first-quarter earnings. Revenue of $1.5 billion was a 25% increase from a year ago and was better than the $1.4 billion analysts expected.
But the real surprise was the company’s profitability. While experts expected an EPS loss of 4 cents, Shopify confounded expectations by posting a profit of 5 cents per share.
Shopify attributed the gains to a 15% increase in gross merchandise volume sold on the platform during the quarter.
Also of note: Shopify announced it’s selling its logistics division to Flexport in exchange for a 13% share in the latter company. That’s probably a good idea, as it will allow Shopify to focus on its core e-commerce business without getting mired in the logistics side.
Shopify stock is up 75% so far this year, making it one of the top-rated stocks in the space. The stock has an earnings momentum grade of “A” and a “B” overall rating from the Portfolio Grader.
Tencent Music Entertainment (TME)
Tencent Music Entertainment (NYSE:TME) is a streaming music service in China.
It offers everything from live-streamed concerts to music videos and online karaoke. The company is a subsidiary of Tencent Holdings (OTCMKTS:TCEHY), a mammoth tech conglomerate based in China.
Earnings for the first quarter included revenues of 7 billion yuan ($1.02 billion), which beat analysts’ expectations of 6.91 billion yuan. Earnings per share of 0.89 yuan was better than the 0.8 yuan that Wall Street expected.
TME stock is down 3% this year but still has a 95% gain over the last 12 months. The stock has an earnings momentum grade of “A” and an “A” overall rating from the Portfolio Grader.
BigBear.ai (NYSE:BBAI) is an up-and-coming tech company that works with machine learning and artificial intelligence to provide customer insights.
That’s a valuable business, as the company already has a prime contract with the U.S. Air Force. I fully expect to grow its lucrative government contracting business.
And while it has a market capitalization of only $345 million, BigBear is rewarding investors. First-quarter earnings included revenue of $42.2 million, a 15.8% increase from a year ago.
True, the company reported a net loss of $26.2 million for the quarter, but nearly $14.5 million of that was non-cash expenses related to a change in market value in PIPE warrants issued in January, as well as other issues.
As a small and emerging company, you can expect BBAI stock to be volatile, so keep that in mind if you take a position. The stock is up 259% this year but gained more than 800% in February. Holding BBAI stock can be a wild ride.
BigBear.ai has an earnings momentum grade of “A” and a “B” overall rating from the Portfolio Grader.
Bloom Energy (BE)
Bloom Energy (NYSE:BE) is a California company that builds, sells and installs oxide platforms that make electricity and hydrogen.
As businesses are increasingly looking to reduce their carbon footprint and produce clean, hydrogen-based fuel products, I expect Bloom to profit from this trend, and the Inflation Reduction Act passed last year that encourages green energy solutions.
Bloom is working with Elugie, an energy services company, to serve clean fuel markets in Belgium, the Netherlands and Luxembourg.
Earnings in the first quarter included revenue of $275.19 million, a 36.88% increase from a year ago. Analysts were expecting only $256.1 million in revenue.
BE stock is down 28% this year, but the earnings momentum is on its side. Bloom has an earnings momentum grade of “A” and a “B” overall rating from the Portfolio Grader.
Another top Chinese tech company, Baidu’s (NASDAQ:BIDU) primary claim to fame is its massive search engine and online advertising platform.
Baidu operates the biggest search engine in China, with a market share of more than 60%. It’s solid on mobile, with a more than 70% market share. It also recently debuted the ERNIE Bot, a language model that purportedly understands human intentions and provides responses that mimic human fluency.
Earnings for the first quarter included $31.14 billion and $16.10 per share, both better than expectations of $29.99 billion in revenue and EPS of $12.79.
As the Chinese economy emerges from the Covid-19 shutdowns and improves, BIDU will be even stronger. BIDU has an earnings momentum grade of “A” and a “B” overall rating from the Portfolio Grader.
Troika Media (TRKA)
New York-based Troika Media (NASDAQ:TRKA) is a marketing company that helps companies develop and market their brands.
Its services include strategic marketing, creative design, content production and media planning.
Earnings in the first quarter were great – revenue of $59.04 million was 276% better than a year ago and was the fifth consecutive quarter of record revenue.
Nothing says positive momentum more than setting records for five consecutive quarters!
However, you should also be aware that the company’s facing a possible delisting from Nasdaq for having a stock price below $1 per share. Shares are currently at about 19 cents and haven’t been over $1 since June 2022.
Troika is fighting the notice and is planning a reverse stock split to push its share price back over $1. Either way, prepare for some volatility with this stock.
TRKA stock has an earnings momentum grade of “A” and a “B” overall rating from the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.