Despite a strong stock market performance last week, a sluggish economic growth rate in the third quarter, ongoing supply chain disruptions, high inflation, and a potential tightening of U.S. monetary policy will likely sustain investors’ concerns. So, in this environment, we think it could be wise to bet on momentum stocks China Shenhua Energy Company (CSUAY), Canadian Natural Resources (NYSE:CNQ), and Mueller Industries (NYSE:MLI). The shares of these companies have managed to gain momentum over the past few months, and we think are well-positioned to maintain that momentum in the near term. So, let’s discuss.The major stock indexes closed at record highs on Friday despite weak third-quarter earnings reports from big technology companies. However, the Wells Fargo (NYSE:WFC) Securities head of equity strategy expects Wall Street to experience a losing 2022 after a solid year-end rally. The Fed’s plans to tighten its monetary policy, a slow economic growth rate in the third quarter due to a deceleration in consumer spending and residential investment, and continued supply chain bottlenecks could lead to significant market volatility in the near term.
Moreover, the Commerce Department reported Friday that annual inflation rose at its fastest pace in more than 30 years during September despite a decline in personal income. With this inflation threat, investors are maneuvering to respond to the risk. Therefore, we believe it could be wise to invest in stocks that have managed to gain momentum and can maintain that momentum irrespective of market volatility.
We think China Shenhua Energy Company Limited (CSUAY), Canadian Natural Resources Limited (CNQ), and Mueller Industries, Inc. (MLI) could be ideal bets now because they have exhibited solid momentum over the past few months, which they are expected to maintain in the near term. Each of these stocks has an overall Strong Buy rating and an A grade for Momentum in our proprietary POWR Ratings system.