What does it take for investors to find that one stock — the one offering momentum but one that also won’t start slowing down suddenly? Well, there are a few factors.
Investors can identify momentum in stocks by looking for patterns of consistent price increases, high trading volumes, and upward trends in key technical indicators like moving averages. A stock showing momentum will often be trading above its short-term moving averages (like the 50-day moving average) and possibly even its longer-term averages (like the 200-day moving average). This would show sustained buying interest.
Plus, momentum stocks frequently outperform other stocks. So, investors might also observe increasing trading volume during price gains. This suggests growing interest and confidence among investors. And there are some I would certainly watch right now.
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Celestica
Celestica (TSX:CLS) on the TSX is showing no signs of slowing down, thanks to its strong financial performance and optimistic future outlook. In the second quarter (Q2) of 2024, the company reported a significant 23% increase in revenue year over year, reaching $2.39 billion. That growth was driven primarily by the robust performance of its CCS (Connectivity and Cloud Solutions) segment. This saw a 51% increase in revenue compared to the previous year.
Furthermore, Celestica’s non-IFRS (international financial reporting standards) adjusted EPS (earnings per share) jumped 65% year over year to $0.91, indicating the company’s efficiency in converting revenue into profit. These impressive numbers have led the company to raise its full-year outlook for 2024, projecting 19% revenue growth and 49% EPS growth compared to 2023.
What’s particularly encouraging for investors is Celestica’s ability to maintain strong operating margins and return on invested capital. The company’s adjusted return on invested capital jumped to 26.7% from 20.0%. With the company consistently beating its guidance and delivering robust cash flows, Celestica appears to be well-positioned for continued growth. As the demand for its design, manufacturing, and supply chain solutions remains high, investors can expect Celestica to keep riding this wave of momentum on the TSX.
Aritzia
Aritzia (TSX:ATZ) also shows no signs of slowing down, and its recent financial performance is a testament to that. In the first quarter of Fiscal 2025, the company reported a solid 7.8% increase in net revenue year over year, reaching $498.6 million. This growth was driven primarily by a 13% surge in U.S. net revenue. This now makes up over half of the company’s total revenue. Aritzia’s strategy of expanding its real estate footprint in the U.S. and increasing brand awareness is clearly paying off.
The company also managed to improve its gross profit margin by 510 basis points, indicating better cost management and higher profitability per dollar of sales. Plus, Aritzia’s focus on optimizing inventory and its strong performance across all channels, including a 4.2% increase in e-commerce revenue, highlight the company’s ability to adapt and thrive in a dynamic retail environment.
Despite a slight dip in net income due to a non-recurring gain in the previous year, the company’s adjusted net income surged by 122.7%. With continued investments in digital initiatives and a robust pipeline of new boutique openings, particularly in the U.S., Aritzia seems well-positioned for sustained growth. This makes it an attractive stock for investors looking for a strong performer in the retail sector.
Bombardier
Bombardier (TSX:BBD.B) has consistently demonstrated strong financial performance. And its second-quarter 2024 results showcased significant year-over-year growth across key metrics. Bombardier delivered 39 aircraft, generating $2.2 billion in revenue, with an 18% increase in services contributing to this robust performance. The company’s ability to maintain this momentum. Even as it navigates challenges in the global supply chain, highlighting its resilience and strong market position.
Moreover, Bombardier’s flagship Global 7500 business jet continues to set industry records. This further establishes the company as a leader in ultra-long-range business aviation. The Global 7500 has achieved over 50 speed records in less than 50 weeks, demonstrating its superior performance and reliability. With a growing order backlog of $14.9 billion and strong liquidity, Bombardier is well-positioned to continue its upward trajectory, making it an attractive option for investors looking for growth in the aerospace sector.
