Momentum Stocks: Amazon and Apple
Companies with accelerating earnings growth are considered momentum stocks. They exhibit regular and increasing earnings power as demand for the company’s products and services grows. As this demand grows, the value of the company’s stock tends to gain as well.
Both Amazon.com, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL) have had their earnings consensus for next quarter and next year increased within the past four weeks. They have shown positive earnings surprise, on average, over the last year. The earnings growth for the last three years has exceeded 30% annually and in the wake of a terrible 2009, they have also had very positive earnings growth. For that matter, Google Inc. (NASDAQ:GOOG) seems to match up with these companies as well, although not quite as strongly in historical earnings growth, but impressive nonetheless.
|Earnings Surprise - Last Quarter||76.4%||7.7%||18.1%|
|Avg. Earnings Surprise - One Year||35.8%||11.7%||23.6%|
|Chg. in Next Yr. Est. in Last 4 Weeks||38.7%||4.2%||10.4%|
|Chg. in Next Qtr. Est. in Last 4 Weeks||32.3%||3.8%||7.7%|
|Earnings Growth, 3-Yr.||30.6%||24.1%||61.9%|
|Earnings Growth, 1-Yr.||51.6%||53.3%||36.0%|
Look for these stocks perform well in 2010 given their strong performances in recent years. Stock charts are below for quick reference.
Amazon appears to be catching support at its current level around $120. Watch for upward price movement signaling the support is holding.
Apple has recently bounced off its $190 support level and appears to making some progress. The stock seems to be stuck in a trading range between $190 and about $215. The iPad should help elevate the stock to the upper band of the trading range and hopefully beyond.
Like the previous stocks mentioned, Google seems to have found some price support at $530 after the January sell-off. Google remains a strong company for investors everywhere and it might be a great time to snap up some shares after they got discounted pretty heavily in January.
Disclosure: No positions in securities mentioned at the time of writing.