What are we looking for?
Stocks with positive momentum sustained by fundamentals.
Extensive research indicates that stocks exhibiting strong price momentum, coupled with upward earnings-per-share revisions, have a greater likelihood of outperforming the broader market over time. This may be due to the fact that sustained momentum often signals strengthening business fundamentals, growing investor confidence, and supportive market conditions.
By focusing on these key factors, we aim to highlight companies where strong earnings growth, positive analyst sentiment, and robust financial health align with price appreciation. We think this intersection of technical and fundamental strength increases the probability of continued upside.
The screen
We screened US stocks using the following criteria:
- CPMS score in the top 20th percentile – We rank the US universe based on the three-year average return on capital (ROC) and the forward price-to-earnings ratio (Fwd. P/E). This removes the bottom 80th percentile from our screen We then apply the other criteria;
- market capitalization greater than US$1 billion;
- Price return over three-months and six-months greater than 3 and 6 per cent respectively;
- Positive EPS revision over three-months and six-months;
- Three-year annualized EPS growth greater than 7 per cent.
For informational purposes, we also added dividend yield
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What we found
Companies with solid momentum
| TICKER | NAME | PRICE (US$) | CPMS SCORE | MKT CAP (Bil. US$) | 3M PRICE RTN. (%) | 6M PRICE RTN. (%) | 3M EPS REV. (%) | 6M EPS REV. (%) | 3Y EPS ANN.GRTH (%) | 3Y ROC (%) | FWD. P/E | DIV. YLD. (%) |
| PINS-N | 38.87 | 70 | 23.1 | 28.2 | 21.3 | 2.2 | 5.0 | 14.3 | 37.1 | 20.7 | – | |
| LULU-Q | Lululemon Athletica Inc | 366.68 | 70 | 42.8 | 14.4 | 41.3 | 1.9 | 1.6 | 25.2 | 39.8 | 23.7 | – |
| EXPE-Q | Expedia Group Inc. | 202.38 | 68 | 25.0 | 9.6 | 45.5 | 1.1 | 1.2 | 61.7 | 27.3 | 13.9 | 0.8 |
| LOPE-Q | Grand Canyon Education | 183.7 | 68 | 5.4 | 11.6 | 26.7 | 0.0 | 0.1 | 11.4 | 34.5 | 20.9 | – |
| ADSK-Q | Autodesk Inc | 302.72 | 65 | 65.2 | 3.7 | 17.2 | 0.5 | 2.4 | 17.6 | 43.4 | 32.7 | – |
| PCTY-Q | Paylocity Holding | 216.96 | 65 | 12.1 | 4.5 | 34.4 | 1.2 | 1.7 | 44.3 | 43.2 | 32.8 | – |
| PRDO-Q | Perdoceo Education Corp | 28.46 | 65 | 1.9 | 3.7 | 26.8 | 0.0 | 0.9 | 11.5 | 21.4 | 12.5 | 1.8 |
| CAH-N | Cardinald Health Inc | 126.21 | 65 | 30.5 | 3.2 | 12.0 | 1.5 | 4.1 | 18.6 | 24.9 | 15.9 | 1.6 |
| FFIV-Q | F5 Inc. | 310.18 | 61 | 17.9 | 23.9 | 52.7 | 1.0 | 2.4 | 11.4 | 25.0 | 21.6 | – |
| FLEX-Q | Flex Ltd. | 42.51 | 60 | 16.3 | 9.1 | 30.8 | 4.0 | 2.9 | 8.4 | 18.0 | 14.8 | – |
| G-N | Genpact Limited | 55.05 | 60 | 9.6 | 19.3 | 40.3 | 3.2 | 4.7 | 10.0 | 18.2 | 15.5 | 1.2 |
| RPRX-Q | Royalty Pharma | 32.36 | 59 | 14.0 | 21.4 | 11.5 | 8.4 | 6.9 | 32.1 | 6.2 | 7.0 | 2.7 |
| CVLT-Q | CommVault Systems Inc. | 184.91 | 59 | 8.1 | 7.8 | 19.0 | 3.6 | 4.4 | 11.3 | 130.8 | 45.4 | – |
| FTNT-Q | Fortinet Inc. | 111.64 | 59 | 85.6 | 17.5 | 45.5 | 1.1 | 10.2 | 44.6 | 69.2 | 45.6 | – |
| V-N | Visa Inc. | 353.81 | 59 | 609.7 | 12.3 | 28.0 | 0.7 | 1.8 | 16.9 | 32.7 | 31.3 | 0.7 |
Pinterest (PINS) is a social media platform that enables users to discover and save ideas through images and videos. It boasts the highest short-term price momentum on our list, with a three-month return of 28.2 per cent. Its earnings outlook is improving, backed by a six-month EPS revision of 5 per cent, the third-highest in our screening. This contrasts with a six-month price increase of 21.3 per cent, the fifth-lowest in our screen, indicating potential for further price appreciation as earnings expectations continue to improve.
Expedia (EXPE) is an online travel company that operates several travel booking platforms. Expedia exhibits mixed momentum, with a three-month return of 9.6 per cent but a strong six-month return of 45.2 per cent. The company’s standout feature is its solid EPS growth, with a three-year annualized growth of 61.7 per cent, the highest in our screen. Expedia also trades at the third-lowest valuation of our list, with a forward P/E of 13.9.
Lululemon (LULU) is a leading athletic apparel brand renowned for its high-performance wear and loyal customer base. It maintains a well-balanced financial profile, ranking favorably in our screen due to consistent price momentum, earnings revisions and profitability. The stock has demonstrated impressive momentum, delivering a six-month return of 41.3 per cent. Lululemon’s fundamentals remain solid, with a three-year EPS growth of 25.2 per cent and a three-year ROC of 39.8 per cent, reflecting efficient capital allocation. However, its valuation appears less appealing, with a fwd. P/E of 23.7, ranking lower compared to other candidates on our screen.
Investors are advised to do further research before investing in any of the companies listed in the accompanying table.
For more details about these stocks, subscribe to the Inovestor for Advisors platform for free.
Anthony Ménard, CFA, is vice-president of data management at Inovestor.
