While the equity markets are trading near all-time highs, the rally is still primarily being driven by Big Tech companies, such as Nvidia (NVDA), Microsoft (MSFT), and Amazon (AMZN). This suggests that companies across multiple sectors may still have significant upside potential, especially if interest rates are lowered and inflation is brought under control in the next 12 months.
Chris Senyek, the chief investment strategist at Wolfe Research, has identified 34 momentum stocks in the S&P 500 Index ($SPX) that have seen at least a 5% hike in EPS revisions since the start of Q2.
Here are five of those momentum stocks, all with “strong buy” consensus ratings from analysts, that you can add to your watchlist this June.
#1. Western Digital Stock
Valued at a market cap of $24 billion, Western Digital (WDC) is engaged in the development, manufacture, marketing, and sale of data storage devices and solutions. It operates through segments such as Flash (flash-based data storage devices) and Hard Disk Drive (hard disk storage solutions).
Out of the 21 analysts covering WDC stock, 17 recommend “strong buy” and four recommend “hold.” The average target price for WDC is $87.33, about 14% higher than the current trading price.
#2. Micron Technology Stock
Valued at $140 billion by market cap, Micron Technology (MU) is a semiconductor giant that increased its revenue by 58% year over year to $5.8 billion in fiscal Q2 of 2024 (ended in March).
Micron’s growth story is far from over, as it expects to spend $8 billion in capital expenditures in fiscal 2024, up from its previous forecast of $7.5 billion. Moreover, Micron is forecast to end fiscal 2025 with adjusted earnings of $7.93 per share, translating to a forward p/e of 16 times, which is not too expensive.
Out of the 27 analysts covering MU stock, 24 recommend “strong buy,” two recommend “moderate buy,” and one recommends “hold.” The average target price for Micron stock is $134.64, about 2.1% higher than the current trading price.
#3. Leidos Stock
Leidos (LDOS) provides services and solutions in multiple verticals such as defense, intelligence, civil, and healthcare. In Q1 of 2024, Leidos reported revenue of $3.98 billion and earnings of $2.29 per share, higher than estimates of $3.8 billion and $1.65 per share, driven by strength in its health and civil agency businesses.
Out of the 14 analysts covering LDOS stock, 12 recommend “strong buy,” and two recommend “hold.”
The average target price for LDOS stock is $158.17, which is 9.1% higher than the current trading price.
#4. Royal Caribbean Group Stock
Shares of Royal Caribbean (RCL) have more than tripled since the start of 2023, valuing the company at a market cap of roughly $40 billion. In the March quarter, its operating income surged close to 200% which suggests the stock is priced at 13 times forward earnings.
Out of the 17 analysts covering RCL stock, 13 recommend “strong buy,” one recommends “moderate buy,” and three recommend “hold.” The average target price for RCL stock is $161.41, about 3.3% higher than the current trading price.
#5. Monolithic Power Stock
The final momentum stock on my list is Monolithic Power (MPWR), a fabless power chip designer. The AI megatrend allowed the company to increase enterprise data sales 217% year over year in the most recent quarter, driven by demand for data center servers. The company’s data center and enterprise compute power chips revenue stood at $150 million in Q1, accounting for a third of total sales.
Out of the 12 analysts covering MPWR stock, nine recommend “strong buy,” two recommend “moderate buy,” and one recommends “hold.”
The average target price for MPWR stock is $773.40, about 3.4% higher than the current trading price.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
