Momentum Stocks
The Fastest Road to Triple-Digit Gains Plus 5 Roaring Momentum Stock Plays
An Investment U Research Report
by Bob Williams, Investment U Research Department
There's an old saying that a horse is easiest to ride in the direction its already going or the path of least resistance. This is the methodology of an aggressive style of investing known as momentum investing.
Momentum investing targets companies with rapidly growing earnings, a history of positive earnings surprises and stock prices that have a strong upward price trend. These companies lead virtually all other companies in terms of sales growth and operating margins and annihilate the returns of the broad market and returns offered by its industry peers. In this Investment U research report, we'll review momentum investing as a strategy and review some momentum stocks worth looking into today.
Many of the best-performing stocks of the past-the ones that have turned $10,000 into more than $1,000,000 for hundreds of investors-are businesses you've been patronizing for years. For instance, Wal-Mart (NYSE: WMT) shares rose 40,232% during the last bull market. That's enough to turn $10,000 into more than $4 million. Savvy momentum players were in the stock after the first strong price push.
Microsoft (Nasdaq: MSFT) Is Another Momentum Stock Example
You would never think of the software giant as a momentum stock, but at one time it certainly was. The stock rose 61,034% in the 13 years following its IPO. That turned a $10,000 investment into more than $6.1 million.
Cisco Systems (Nasdaq: CSCO), the biggest maker of routers and switches for Internet connections, rose 95,667% in the 1990s alone. There were several stops along the way for momentum players to climb aboard. A $10,000 investment here would have allowed you to spend the rest of your life sitting on tax-free bonds. Because $10,000 grew to an astonishing $9.56 million in less than 10 years.
Unfortunately, Wal-Mart, Microsoft and Cisco cannot possibly generate these kinds of returns in the future. They're much too big to grow at that rate now.
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