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Nasdaq's Rally Continues Unabated: 4 Momentum Stocks to Buy

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Aniruddha Ganguly
·5 min read
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The Nasdaq composite has been outperforming the Dow Jones Industrial and the S&P 500 so far this year, driven by the momentum in technology stocks that have shown great resilience amid the coronavirus pandemic.

The tech-laden index has been up 39.5%, year to date, compared with the Dow Jones Industrial’s gain of 5.4% and the S&P 500’s rally of 14.3%.

The momentum in Nasdaq is expected to continue in 2021 as well, primarily fueled by the changing consumer preference and behavior. Prolonged stay-at-home is driving demand for web-based services like e-commerce, contactless payment and delivery.

Moreover, the work-from-home and online learning wave is anticipated to keep demand for remote-working tech, cloud services and cybersecurity solutions high. This has also fueled demand for chips from PC makers, thereby benefiting semiconductor companies.

Additionally, the rapid adoption of cloud computing, along with the infusion of AI and machine learning, as well as the accelerated deployment of 5G technology, autonomous vehicles, AR/VR and wearables are major positives.

Nasdaq Momentum to Boost Portfolio

Momentum investing calls for continued appraisal of stocks, which ensures that an investor does not pick a beaten-down name or overlook a thriving one. Momentum investors buy high on anticipations that the stock will only ascend in the short to intermediate term.

Here we pick four Nasdaq-listed momentum stocks that have been up in the past week as well as the past month.

Apart from stellar growth potential and robust earnings estimate revisions, each of these stocks has a favorable combination of a Momentum Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

These stocks also have a market cap of more than $1 billion and have outperformed the S&P 500 composite on a year-to-date basis.

Year-to-Date Performance

 

Micron Technology MU is benefiting from solid demand for memory chips from cloud-computing providers and acceleration in 5G adoptions. This $81.91-billion company has been witnessing stronger memory-chip demand from PC manufacturers and data-center operators. Further, 5G adoption beyond mobile is likely to spur demand for memory and storage, particularly in IoT devices and wireless infrastructure.

Micron currently flaunts a Zacks Rank of 1 and a Momentum Score of A. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $3.63 per share, having been raised 31% in the past 30 days. It indicates 28.3% growth from the figure reported in the year-ago quarter.

The stock has gained 15.6% in the past week and 34.4% in the past month.

Brooks Automation BRKS is gaining from robust growth in its life sciences business driven by the COVID-19-led demand. Moreover, the expanding life-science clientele is a positive. The recently-announced acquisition of Trans-Hit Biomarkers is a key catalyst as the deal will strengthen Brooks’ infectious disease market share. Furthermore, solid demand for automation solutions is a key catalyst.

Brooks currently sports a Zacks Rank of 1 and a Momentum Score of A. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $1.70 per share, having moved 26% north in 30 days’ time. It calls for a 17.2% jump from the figure reported in the year-earlier quarter.

Shares of the company have rallied 6.8% in the past week and 32% in the past month.

MACOM Technology Solutions MTSI is benefiting from growing proliferation of cloud services. Also, solid demand for high-performance analog components, such as TIAs, CDRs and drivers, which are required in 100G deployment, are strengthening MACOM’s presence in the data-center market.

This Zacks Rank #1 company, with a Momentum Score B, is set to launch products related to 5G, and data-center lasers and silicon photonics that are expected to stoke growth.

The Zacks Consensus Estimate for the company’s fiscal 2021 earnings is pegged at $1.63 per share, having been revised 10.1% upward in the past 30 days, suggesting a surge of 66.3% from the figure reported in the prior-year quarter.

Shares of this $3.26-billion company have been up 10.4% in the past week and 15.7% in the past month.

Cohu COHU is gaining from the rising demand for its semiconductor test and inspection handlers, micro-electro mechanical system (MEMS) test modules, test contactors and thermal sub-systems in the wireless mobility market. Improving automotive and industrial, and rising demand for EVs bode well for the company. The company has a market cap of $25.36 billion.

Cohu currently carries a Zacks Rank #2 and a Momentum Score of A. The consensus mark for 2020 earnings is pegged at $1.05 per share, having moved 10.5% north in the past 30 days. The company had reported earnings of 9 cents per share in the year-ago quarter.

Shares of this $1.62-billion company have appreciated 42.2% in the past week and 64.8% in the past month.

 

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Micron Technology, Inc. (MU) : Free Stock Analysis Report
 
Cohu, Inc. (COHU) : Free Stock Analysis Report
 
Brooks Automation, Inc. (BRKS) : Free Stock Analysis Report
 
MACOM Technology Solutions Holdings, Inc. (MTSI) : Free Stock Analysis Report
 
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