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What are we looking for?

U.S. large-cap stocks showing price momentum across multiple time frames.

The latest survey of U.S. asset managers by Merrill Lynch showed they had raised their allocations to U.S. stocks to their highest levels since January, 2015. The haven appeal of the U.S. dollar plus a strong earnings season has made the U.S. stock market unusually attractive. With no sign of a market slowdown in sight, momentum stocks continue to attract large inflows of capital. Besides the obvious plays such as the FAANG stocks (Facebook Inc., Apple Inc., Amazon Inc., Netflix Inc. and Alphabet Inc. subsidiary Google), are there other stocks showing strong upward momentum that deserve a closer look?

The screen

We will be using Trading Central Strategy Builder to search for U.S. large-cap stocks demonstrating strong upward price momentum.

We will start by screening for U.S. stocks with a market capitalization of at least US$15-billion. This will limit our search to the largest and most stable companies in the market with correspondingly higher quality revenue and earning streams.

Next, we will search for stocks demonstrating price momentum across multiple time horizons. We will look for:

  • Five-day price performance greater than 2 per cent;
  • Thirteen-week price performance greater than 10 per cent;
  • Year-to-date price performance greater than 20 per cent.

Last, to find stocks poised to make further gains, we include only stocks trading within 5 per cent of their 52-week highs.

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What we found

Topping our list is mobile-payments specialist Square Inc., up a dazzling 108 per cent year-to-date and almost 28 per cent in the past quarter. Strong growth in merchant adoption and successive quarters of earnings beats have pushed Square to within 4 per cent of its record high, set on Aug. 14.

Telecom provider CenturyLink Inc. also makes our list after very strong second-quarter earnings released on Aug. 8. CenturyLink stock has languished for most of the past three years, declining from US$40 in 2014 to just US$17 in early 2018. In their latest earnings, the company shocked the market with very strong upward guidance for the remainder of 2018. Since then, the stock has rallied more than 20 per cent and, yet, still has a dividend yield surpassing 10 per cent.

Sysco Corp. is a multinational food-distribution firm based in Houston. Sysco stock is now trading just 0.3 per cent off its 52-week high after releasing excellent fourth-quarter earnings in mid-August with strong growth across its business. Sysco stock rallied to a new record high this week and is now up 18 per cent in the past quarter and 23 per cent year-to-date.

The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

Select U.S. large-caps showing price momentum

Rank Company Ticker Recent Price (US$) Market Cap. (US$Bil) 5-Day Price Performance 13-Wk Price Performance YTD Price Performance % Change from 52-Week High Div. Yield
1 Square Inc. SQ-N $72.24 $31.0 2.1% 27.7% 108.4% -4.3% 0.0%
2 CenturyLink Inc. CTL-N $22.47 $24.2 21.2% 16.7% 34.7% -1.6% 11.6%
3 Centene Corp. CNC-N $143.70 $29.5 4.5% 27.1% 42.4% -0.4% 0.0%
4 Worldpay Inc. WP-N $91.64 $28.0 9.9% 13.2% 24.6% -1.5% 0.0%
5 Sysco Corp. SYY-N $74.89 $38.7 7.2% 18.2% 23.3% -0.3% 2.1%
6 O'Reilly Automotive Inc. ORLY-Q $324.75 $26.0 2.1% 19.7% 35.0% -0.8% 0.0%
7 McCormick & Co. Inc. MKC-N $126.42 $16.0 2.3% 16.4% 21.8% 0.0% 1.7%
8 Automatic Data Processing Inc. ADP-Q $141.24 $61.8 2.5% 10.3% 20.5% -0.3% 2.0%

Source: Trading Central

Peter Ashton is vice-president of customer success at Trading Central.

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