The principle of momentum investing—though contrary to the traditional wisdom of buying low and selling high—suggests that investors can profit by buying rising stocks and selling them before they decline. As a result, momentum is typically favored in short-term and active trading strategies rather than long-term investing.
The key for momentum investors is timing a purchase so that it capitalizes on a stock's popularity among investors while it still has upward potential. Unsurprisingly, many analysts shy away from momentum stocks due to the inherent difficulties in timing this rise and fall trajectory. For investors considering a momentum play early in 2025, three firms that have experienced recent rallies while still enjoying a bullish view by analysts are Compass Therapeutics Inc. (NASDAQ: CMPX), Amprius Technologies Inc. (NYSE: AMPX), and Allot Communications Ltd. (NASDAQ: ALLT).
