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Invest in these stocks showing earnings momentum while market reaches all-time high

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Investors should not overlook stocks with forward earnings momentum, according to Liberum. Joachim Klement, an analyst at the investment bank, screened for S & P 500 stocks that have received earnings upgrades over the past one, three, and six months. Companies with this momentum have outperformed their counterparts by 0.2% in the past month. Earnings momentum can be a positive sign for a company, as it often aligns with revenue growth, improved margins, or cost reductions. However, earnings per share momentum has had a mixed track record in the U.S. market, performing well in times of crisis but losing gains in the years following.

Despite the broader market trading near all-time highs, investors are looking for individual stocks with potential for growth. Some of the stocks that passed Liberum’s screen include Nvidia, Amazon, Meta, Netflix, and General Motors. Nvidia, an artificial intelligence leader, has seen a 25% growth in forward earnings over the past three and six months. The stock has gained over 140% in 2024 and has reached a market cap of over $3 trillion. However, analysts expect a slight pullback in the share price over the next year.

Other megacap tech stocks like Amazon, Meta, and Netflix also made the list of stocks with forward earnings momentum. General Motors, an automotive stock, has seen its forward earnings expectations increase by more than 35% in the past six months. The stock has outperformed the S & P 500 with a 27% rally this year, and analysts see more upside ahead, with a price target suggesting about 18.5% in potential gains.

Deutsche Bank research head Tim Rokossa recently stated that General Motors is a safer investment option compared to Ford, citing factors like lower dealer inventories, guidance that accounts for price cuts, and signals of larger capital returns to shareholders later in the year. Overall, investors may want to consider stocks with consistent forward earnings momentum as potential opportunities for growth in their portfolios.

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