Three Momentum Stocks for Your Portfolio (NASDAQ:AMZN),(NASDAQ:AAPL),(NASDAQ:NFLX)
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. This is generally a sign that a company's future is optimistic for the long term because of demand for their products and services.
Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL) and Netflix, Inc. (NASDAQ:NFLX) have had their earnings consensus recently increased for both next quarter and next year. They have shown positive average earnings surprises 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.
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Apple has obviously been ramping up with releasing new products like the iPad and continues to dominate with the iPhone. The stock price has been faltering a bit with the recent overall stock market worries, but the charts show strong support at about $232. The recent weakness may present a good buying opportunity for investors.
Amazon has likewise taken some punishment with the overall market decline, but the stock appears to be catching support and bouncing off the $115 level. Amazon has been rapidly promoting its Kindle Reader to contribute to sales, not to mention that you can buy pretty much anything from Amazon.
Netflix has been on an absolute tear lately. The stock price has more than doubled since the beginning of the year and the momentum continues. It seems the downturn in the economy has people staying home to watch movies instead of going to the theatre. Also, since they offer streaming movies (i.e. no waiting for the mail to deliver it), Netflix clients are more than pleased to pay for Netflix services. Currently, Netflix stock price is at a fast clip up and interested investors may wait for a pull back to somewhere near the 20-day moving average which is around $108.
|Apple Inc.||Amazon.com Inc.||Netflix Inc.|
|Earnings Surprise Last Quarter||37.0%||6.5%||9.3%|
|Avg. Surprise, one year||39.5%||16.0%||13.2%|
|3-Yr. Earnings Growth||31.4%||43.2%||34.8%|
Disclosure: No positions at the time of this writing.