The nine-year-old bull market in U.S. stocks has been dominated by growth and momentum plays, such as the popular FAANG group of stocks. These momentum stocks have significantly outperformed value stocks, and Oppenheimer analyst Ari Wald says there’s no reason for investors to be fearful of momentum stocks just because stock prices are near all-time highs. After nine years, a certain degree of caution is understandable, but Wald says price action has remained bullish. Wald and the Oppenheimer analyst team recently selected the best momentum stock to buy in each of nine different market sectors.
Energy: Marathon Petroleum Corp. (ticker: MPC)
Wald says refiners are the best group within the energy sector, and Marathon Petroleum has significant long-term momentum following a breakout above $60 in late 2017. In addition to its positive momentum, Marathon recently raised its dividend by 15 percent and now yields about 2.1 percent. Even at its current payout, the stock’s relatively low 21 percent payout ratio suggests more hikes could be on the way in the near future. Marathon also recently diversified away from its Gulf-Coast-centric operations by acquiring Andeavor (ANDV) and its West Coast and Rocky Mountains assets for $23 billion.
Industrial: Roper Technologies (ROP)
Roper makes high-tech industrial equipment, and its stock has been red-hot as of late. ROP broke above $290 in July after months of consolidation and has stayed above that level ever since. The breakout was triggered by the company’s earnings beat and relatively strong earnings growth among its peer group. Revenue was up 14 percent in the most recent quarter, including 9 percent organic revenue growth. Demand is strong, and Wald expects the stock’s bullish momentum to continue.
Consumer discretionary: Netflix (NFLX)
Even after its huge run over the past decade, Oppenheimer says Netflix is still the top momentum stock pick in the consumer discretionary sector. NFLX stock took a hit following its disappointing third-quarter guidance, but its share price remained above $300 and above its 200-day simple moving average, preserving its long-term uptrend. Wald says post-earnings weakness is a buying opportunity. While Netflix’s cash burn is concerning to some potential investors, it certainly hasn’t held the stock down up to this point, even after years of the company pouring money into original content and international expansion.
Consumer staples: Church & Dwight Co. (CHD)
Church & Dwight owns…
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