Discovering shares which are primed for beneficial properties is the important thing to success within the inventory markets. Buyers are naturally drawn to rising shares – and whereas a specific fairness’s previous efficiency received’t guarantee its future beneficial properties, momentum is an efficient indicator for figuring out worth actions. Momentum buying and selling – shopping
Discovering shares which are primed for beneficial properties is the important thing to success within the inventory markets. Buyers are naturally drawn to rising shares – and whereas a specific fairness’s previous efficiency received’t guarantee its future beneficial properties, momentum is an efficient indicator for figuring out worth actions.
Momentum buying and selling – shopping for into shares that proven strong beneficial properties and are more likely to maintain shifting upward – is a sound technique, but it surely does take some talent on the investor’s half. A savvy investor has to know the right way to differentiate between a real momentum inventory and a fad.
The hot button is within the profile. Buyers can search for shares that supply a mixture of three elements: robust, sustained beneficial properties; extremely optimistic rankings from Wall Road’s analysts; and an upside potential that factors towards upkeep of additional beneficial properties.
Primarily based on that profile, we’ve pulled up three momentum shares utilizing TipRanks’ database. Not solely have the entire tickers amassed sufficient bullish calls from analysts to be given “Robust Purchase” consensus rankings, however every might additionally see appreciable share worth appreciation.
Kulicke And Soffa Industries (KLIC)
Industrial tech is huge enterprise. Each digital gadget that we use, from smartphones and tablets to manufacturing facility robots, will depend on a linked collection technical devices, giving device makers and half producers a sound basis for true momentum. Kulicke and Soffa, KLIC, supplies options for digital meeting in a wide range of industries, together with the automotive, communications, computing, and client items sectors. The corporate’s product portfolio features a vary of instruments for superior packaging, electronics meeting, lithography, and wire bonding.
In the latest quarterly report, for fiscal Q1 of 2021, KLIC reported $267.9 million on the prime line, up 85% year-over-year. Revenue additionally gained, with EPS at 77 cents. This was greater than triple the year-ago quarter’s 21 cents.
The corporate attributed the robust quarter to elevated demand within the second half of calendar yr 2020. Trying ahead, administration expects to see continued development, and set fiscal Q2 steering at $300 million in income (+/- $20 million) and EPS of 88 cents (+/- 10%).
Combining business and excessive tech has been good for KLIC, whose inventory has gained a powerful 143% up to now 12 months.
Overlaying KLIC for B. Riley Securities, 5-star analyst Craig Ellis believes that the trail is evident for continued momentum.
“We increase F21&F22 estimates… with three elements sustaining a Purchase. First, upstream secular and cyclical chip fundamentals ought to drive robust development deep into C22, propelling upside estimate potential. Second, we imagine new mini-LED and Superior Packaging merchandise stay on monitor for $100M of incremental F22 gross sales and better LT. Third, near-term GM headwinds look temporal, and we count on progress towards 47.5% by means of F21/22 however mannequin extra conservatively,” Ellis famous. “
To this finish, Ellis offers KLIC shares a Purchase ranking, and his $75 worth goal signifies confidence in a 26% upside for the approaching yr. (To observe Ellis’ monitor file, click on right here)
Whereas there are solely three evaluations on file for KLIC, they’re unanimous – to Purchase the inventory. This exhibits that Ellis’ upbeat outlook isn’t any outlier, and provides the inventory its Robust Purchase analyst consensus ranking. (See KLIC inventory evaluation on TipRanks)
ASML Holding (ASML)
We’ll persist with the excessive tech sector, and have a look at one other supplier of the instruments that digital gear producers can not dwell with out. Particularly, ASML Holding designs and builds photolithography gear, which is important within the manufacturing of semiconductor chips. The corporate’s instruments use optical imaging to impress circuit patterns on silicon wafers. That is the important course of in chip making, and ASML Holding has a 67% market share in its business.
It’s a distinct segment business, but it surely’s one of many few that really does make the world go ‘spherical.’ And ASML has profited mightily from its main place. The inventory is up 131% over the previous 12 months.
The Netherlands-based firm posted these share beneficial properties in opposition to a background of rising revenues. The highest line has elevated in every of the final 4 quarter, reaching 4.4 billion Euro (US$5.26 billion) in Q1 of 2021. EPS got here in at 3.21 Euro (US$3.86), greater than triple the $1.02 recorded in 1Q20.
Within the first quarter, the corporate reported excessive buyer demand, with bookings reaching 4.7 billion Euro (US$5.69 billion). Demand was particularly robust within the Put in Base phase, as present prospects moved to improve software program to satisfy their very own rising demand. Within the background here’s a semiconductor chip market that’s seeing each elevated demand and a extreme provide scarcity, as prospects are racing to satisfy orders backlogged in the course of the pandemic shutdowns and suppliers are racing to ramp up manufacturing from pandemic-induced low ranges.
With all of that within the background, BofA analyst Didier Scemama chosen ASML as his prime giant cap choose in European semiconductors.
“We count on ASML to profit from a number of drivers incl. 1) Wholesome competitors amongst ASML buyer base, confirming ASML standing as a “weapon seller” within the Intel/TSMC/Samsung course of “warfare”, 2) Silicon sovereignty, driving EU/US to incentivize chipmakers to re-shore semis manufacturing and including to China’s 2025 semis self-sufficiency ambitions, 3) EUV cycle: we mannequin 21% gross sales CAGR ’20-25 pushed by a number of, concurrent high-growth end-markets,” Scemama opined.
Unsurprisingly, Scemama charges ASML a Purchase, and his worth goal of $806 suggests an upside of 20% within the subsequent 12 months. (To observe Scemama’s monitor file, click on right here)
If we step again and have a look at the larger image, we will see that general the inventory has a ‘Robust Purchase’ analyst consensus ranking. Within the final three months, the inventory has obtained 4 Purchase rankings and simply 1 Maintain. (See ASML inventory evaluation on TipRanks)
The third momentum choose, Ashland, inhabits the specialty chemical area of interest, producing a wide range of needed elements for a variety of industries. The corporate merchandise embody adhesives, emulsifiers, and preservatives – to call just some classes – and are used within the development, coating, vitality, meals and beverage, well being and wellness, packaging, pharmaceutical, and transportation industries. In brief, Ashland is diversified.
That diversification has helped the corporate to climate the corona disaster, and propelled it to a share achieve of 62% within the final 12 months. These beneficial properties got here even because the pandemic – and the affiliate market, manufacturing, and provide disruptions – pushed 2020 annual revenues right down to $2.3 billion from the prior yr’s $2.5 billion.
In the latest quarter, Q1 of fiscal 2021, Ashland reported $552 million on the prime line. This was up 3.5% year-over-year, and beat the pre-earnings estimates by 1.6%. EPS got here in at 99 cents per share, almost double the 52 cents reported one yr earlier – and 25% above expectations.
Analyst John McNulty, weighing in on Ashland from BMO Capital, sees a transparent path ahead for the corporate.
“We see strong upside to margins over the subsequent few years, a deal with innovation/development serving to the highest line and elevated money conversion… ASH continues to work in the direction of enhancing its price construction whereas additionally working to re-accelerate its top-line development… Assuming administration continues to execute and margins enhance to 25%+ whereas the top-line development improves to a mid-single-digit stage, ASH ought to see earnings development that considerably exceeds expectations whereas additionally having fun with a number of growth.” the analyst commented.
McNulty charges ASH shares as Outperform (i.e. Purchase), and his $115 worth goal implies a one-year upside of twenty-two%. (To observe McNulty’s monitor file, click on right here)
Wall Road’s analysts is usually a contentious lot – however once they agree on a inventory, it’s a optimistic signal for buyers to take observe. That’s the case right here, as the entire current evaluations on ASH are to Purchase, making the consensus ranking a unanimous Robust Purchase. (See ASH inventory evaluation on TipRanks)
To seek out good concepts for momentum shares buying and selling at engaging valuations, go to TipRanks’ Greatest Shares to Purchase, a newly launched device that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is extremely vital to do your personal evaluation earlier than making any funding.