Momentum investing is the go-to strategy for investors looking to benefit from ongoing trends in the market.
However, some professionals consider momentum an anomaly. They claim momentum-driven market movement is due to cognitive biases towards stocks that have performed well. This leads to more investors choosing those stocks, driving prices further upward and leaving low-return stocks in the dust. In essence, herd mentality powers the continuous increase or decrease in stock prices and makes it a self-fulfilling prophecy.
Regardless, momentum investing has its place in investing and finance. The way you take advantage of such an opportunity is the important point. One of the primary ways of looking at momentum is a stock’s price performance, like year-to-date (YTD) or 52-week return.
So, investors and traders looking for market-leading, high-performing momentum stocks might consider these three companies.
Technip FMCPLC (FTI)
TechnipFMC plc (NYSE:FTI) is a French-American, U.K.-domiciled oil and gas technology company operating in the energy industry.
First, TechnipFMC offers fully-integrated projects, technologies, products, and services through both subsea and surface technologies. These segments provide the company’s design and manufacturing service to oil and natural gas production and exploration companies. Also, TechnipFMC designs and manufactures technologically advanced, high-pressure valves, pumps, and wellhead systems for exploration and stimulation in the oilfield industry.
In addition, FTI has exhibited strong stock price performance with a 49.88% YTD increase and a 52-week performance bump of 114.69%. This is partially due to FTI increasing investments in offshore production with its reputation for being the top provider of subsea equipment and services.
With its innovation and problem-solving reputation, the company is one of the go-to firms for clients looking for solutions to the industry’s most challenging engineering issues. In turn, FTI is winning contracts left and right. The company’s latest announcement was the Azule energy contract. Furthermore, FTI’s Subsea 2.0 platform has given it significant advantages in providing its customers with cost-saving subsea equipment and service solutions.
Emcor Group, Inc. (EME)
EMCOR Group, Inc. (NYSE:EME) is a specialty contractor operating in the construction and engineering industry.
EME offers electrical, industrial, building, and mechanical services for different industries. These services can cater to client requirements for design, installation, distribution, operation, plumbing, fire safety, etc. Through the years, Emcor’s reputation is a global leader in mechanical and electrical construction services, facilities services, and energy infrastructure services.
Additionally, Emcor has been a substantial price performer since the start of the year, with a YTD return of 44.62% and a 52-week performance of 73.12%. Increasing demands for U.S. construction are expected to boost EME’s bottom line, leading to strong projected growth and increased future sales.
Emcor is also acquiring small private firms with expansion potential and proven management. These transactions have helped the company expand its market share and improve its outlook, earning it a spot in our list of notable momentum stocks to buy.
Builders FirstSource, Inc.(BLDR)
Builders FirstSource, Inc. (NYSE:BLDR) is a building product and prefabricated components supplier servicing the homebuilding industry.
Builders FirstSource produces different materials for a full range of structural and building products. These include factory-built wall panels, custom millwork and trim, roof and floor trusses, and engineered wood designs. BLDR also offers professional installation, construction, and software solutions for the building products industry.
Builders FirstSource is enjoying a solid price performance this year, with a YTD return of 106.75% and a 52-week return of 96.03%. This makes it the most substantial momentum stock on our list. BLDR is focusing on growth acquisitions to supplement its organic growth with businesses that provides value-added offerings for its customer base.
For example, its purchase of Builders Millwork Supply and JB Millworks, LLC has enhanced the company’s capabilities in millwork. BLDR’s strategy can help develop its core business operations and drive future growth. That’s just one more reason we consider it one of the top momentum stocks in the market.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
