For Immediate Release
Chicago, IL – January 6, 2025
Stocks in This Week’s Article: NVIDIA Corp. NVDA, Brown & Brown, Inc. BRO and Chipotle Mexican Grill, Inc. CMG
The S&P 500 is poised for further gains in 2025, driven by the pro-growth initiatives of Donald Trump, moderate interest rate policies from the Federal Reserve, and a resilient U.S. economy. In 2024, the S&P 500 jumped over 20% for the second consecutive year, and investors should take advantage of this bullish trend by investing in strong S&P 500 momentum stocks.
Investing in Momentum Stocks
To succeed in the stock market, investors need to adopt a strategy that aligns with their investment goals. One such strategy is the "buy high and sell higher" theory, developed by Richard Driehaus. This approach involves identifying companies with strong earnings growth rates and impressive earnings projections.
The Driehaus Strategy
According to Driehaus, "I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in decline and try to guess when it will turn around." To apply this strategy, investors can use the percentage 50-day moving average as one of the key criteria.
Calculating the Percentage 50-Day Moving Average
The American Association of Individual Investors (AAII) considered the percentage 50-day moving average as one of the key criteria before creating a portfolio following Driehaus’ philosophy. This indicator is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price.
Positive Relative Strength
Another momentum indicator that has been included in this strategy is positive relative strength. A positive percentage 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.
Top S&P 500 Momentum Stocks
Based on these criteria, here are some of the top S&P 500 momentum stocks:
- NVIDIA Corp. NVDA: A leader in the graphics processing unit (GPU) market, NVIDIA has seen significant growth in its earnings and revenue.
- Brown & Brown, Inc. BRO: A leading insurance brokerage firm, Brown & Brown has a strong track record of delivering consistent returns to shareholders.
- Chipotle Mexican Grill, Inc. CMG: A popular fast-casual restaurant chain, Chipotle has been investing heavily in technology and innovation to drive growth.
Conclusion
Investors who adopt the "buy high and sell higher" strategy can potentially achieve significant returns in 2025. By focusing on companies with strong earnings growth rates and impressive earnings projections, investors can take advantage of this bullish trend and achieve their investment goals.
Sources:
- AAII
- Driehaus
Disclaimer:
This article is for informational purposes only and should not be considered as investment advice. Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.
