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(Vivian Seefeld/Getty Images/Hemera)
(Vivian Seefeld/Getty Images/Hemera)

A portfolio built for trend lovers Add to ...

Mr. Bowman is a portfolio manager at Wickham Investment Counsel Inc. michael@wickhaminvestments.com

What are we looking for?

Most advisers like to tout stocks with low debt, consistent dividend growth and other features associated with the value end of the investing spectrum.

I thought it would be interesting to look at the other end of things: U.S. stocks with strongly rising prices that may not exhibit any of the defensive characteristics so cherished by value and dividend hunters.

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How we did it

My colleague Sean Pugliese and I looked at U.S. companies with share prices that have risen at least 10 per cent over the past 30 days.

We also insisted that share prices had to have gone up at least 25 per cent over the past 90 days. We considered only companies with more $1-billion (U.S.) in market capitalization.

In addition, we factored in analysts’ estimates for earnings growth over the next 12 months. Finally, we looked at the share price appreciation over the past 12 months.

What we found

A list of companies that have performed strongly over the past few months. “Momentum” investors like to invest in such stocks on the theory that shares that are going up keep on going up.

History shows momentum works. The Economist magazine has noted that “since the 1980s academic studies have repeatedly shown that, on average, shares that have performed well in the past continue to do so for some time.”

Mark Hulbert, editor of the Hulbert Financial Digest, which tracks the performance of investment newsletters, said, “the majority of newsletters at the top of the rankings for long term performance are those that, in one way or another, employ momentum strategies.”

Momentum investing challenges conventional wisdom. But while it is not a silver bullet that guarantees future gains, it has proven to be an effective strategy over the longer term.

 

U.S. momentum stocks

Name Ticker Price (US$) Market cap ($billions US) Change 30 day (%) Change 90 day (%) EPS change 12 months (%) 1 year total return (%)
Accenture PLC-A ACN-N 71.04 48.97 15.98 26.59 0.46 29.90
Allied Nevada Gold ANV-A 38.78 3.49 23.11 36.98 0.10 7.72
Allscripts Healthcare MDRX -Q 13.85 2.37 33.43 30.91 0.17 -22.02
Altisource Portfolio ASPS-Q 111.79 2.61 32.37 89.12 9.18 215.17
CVR Energy Inc. CVI-N 39.31 3.41 35.74 61.97 0.01 73.86
Cabela's Inc. CAB-N 55.88 3.90 18.59 66.11 0.12 159.18
Exco Resources XCO-N 8.28 1.79 16.13 25.84 3.03 -15.70
Gannett Inc. GCI-N 18.16 4.20 20.50 46.69 0.18 82.83
Greenhill & Co. GHL-N 51.92 1.49 23.12 62.61 4.19 79.94
Group 1 Auto GPI-N 65.51 1.49 23.51 35.74 0.30 77.26

Source: Bloomberg

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  • OCN-N
  • CVI-N
  • MDRX -Q
  • ASPS-Q
  • PCS-N
  • PHH-N
  • OZM-N
  • ILMN-Q
  • GPI-N
  • ONXX-Q
  • GHL-N
  • ANV-A
  • GCI-N
  • MUX-N
  • HIG-N
  • CAB-N
  • STI-N
  • INXN-N
  • BPOP-Q
  • MDVN-Q
  • SWC-N
  • XCO-N
  • RAX-N
  • ACN-N
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