Although major stock market averages have marched higher on impressive third-quarter corporate earnings this month, high inflation, supply chain bottlenecks, and the potential tightening of monetary policy continue to spook investors. Therefore, we think it could be wise to bet now on fundamentally sound momentum stocks Signet Jewelers (NYSE:SIG), Matson (NYSE:MATX), Tilly's (NYSE:TLYS), and TransGlobe Energy (TGA). These stocks have consistently delivered solid returns and are well-positioned to maintain their momentum in the near term.The major stock indexes’ performances have remained upbeat over the past three weeks thanks to impressive third-quarter corporate earnings. However, the S&P 500 and the Dow Jones Industrial Average slipped from their record highs yesterday. Despite overall positive market sentiment, investors’ concerns about an increase in the Consumer Price Index in September, continuing supply chain disruptions, and the possibility of the Fed tightening its monetary policy in the near term could foster significant market volatility in the near term.
Furthermore, stagflation in China is fueling pessimism among investors regarding the global economic recovery. Given this backdrop, we think investors could benefit by investing in stocks that have momentum that they can maintain irrespective of the market’s volatility. Investor optimism surrounding the momentum stocks is evident in the Invesco S&P MidCap Momentum ETF’s (XMMO) 6.8% returns over the past three months.
Signet Jewelers Limited (SIG), Matson, Inc. (MATX), Tilly's, Inc. (TLYS), and TransGlobe Energy Corporation (TGA) are stocks that have been generating robust momentum over the past few months that they are expected to maintain amid a volatile market. Also each of these stocks has an overall Strong Buy rating in our proprietary POWR Ratings system. Therefore, we think it could be wise to grab these stocks now.