After a choppy first few weeks, the stock market appears to now be on steady footing. On Friday, the S&P 500 index broke out from a four-week consolidation, breaking out above 4,800 and to a new intraday high.
With the market showing such robust action, now is the time to start looking for some stocks that appear primed for explosive moves higher. Here I will share three such stocks that are demonstrating strong momentum as well as top Zacks Ranks.
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The most popular online real estate brands on the internet, Zillow Group ZG owns a leading position in a critically important home-buying experience. Zillow Group is currently trading near its most appealing valuation in recent years at 31x forward earnings.
Additionally, the company has begun to see steady earnings estimates upgrades, giving it a Zacks Rank #1 (Strong Buy) rating. Next quarter earnings estimates have risen by 5.4% over the last two months and are projected to grow 11.4% YoY to $0.39 per share. FY24 earnings estimates have increased by 3.1%, and are forecast to climb 32.6% YoY to $1.66 per share.
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ZG stock looks to be setting up for a powerful momentum breakout, and I think this is one of the most appealing setups in the market. On Friday, Zillow Group stock cleared the $51.50 breakout level, signaling a buy. If the stock can hold above this level it should push to new highs in the coming weeks.
Alternatively, if the stock breaks back down below the $50 level, investors should wait for another opportunity as the trade will be invalidated.
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The cloud-based e-commerce platform, Shopify SHOP has steadily grown into a major piece of infrastructure for small and medium sized enterprises. Shopify expected to grow sales by 25% this year and 19% next year.
Along with a litany of other high-growth technology stocks, Shopify has been on a roller coaster over the last few years. We can see that SHOP stock is well off its all-time high, but has still considerably outperformed the broad market, compounding at an annual rate of 38%.
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Shopify also enjoys a Zacks Rank #1 (Strong Buy) rating reflecting upward trending earnings estimate revisions. EPS are forecast to grow an impressive 49% next year.
Shopify stock has also been forming a convincing technical bull flag. If the price can close above the $79.50 level it would signal a breakout, and likely push to new highs. However, if it loses the $76.50 level of support, it may be wise to look for other options.
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Pinterest PINS, the social media platform with nearly 500 million monthly active users is in my opinion a very compelling stock to consider buying in the current environment. Pinterest is expected to grow its EPS by 36% annually over the next 3-5 years, while also boasting a forward earnings multiple of 28.5x.
This gives it a PEG Ratio of 0.79x, indicating a discounted valuations based on growth estimates.
PINS also has a Zacks Rank #1 (Strong Buy) rating, demonstrated by the upward trending earnings estimates revisions seen in the chart below. With earnings expected to climb in both the coming quarters and years, the company has a multi-timeframe advantage, really improving the odds of the stock rallying.
Image Source: Zacks Investment Research
Pinterest stock has been forming pennants and flags and breaking out steadily since the second half of last year. Over the last five weeks it has built out a clear consolidation, from which it looks ready to break out from.
If PINS stock can breakout above the $38.10 level, it should move swiftly higher. But, if it loses support at $35.60, the setup is broken.
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Investors must remain vigilant in assessing the trajectory of the market and should continue to take advantage of momentum breakout opportunities. As the saying goes, “the trend is your friend,” and until proven otherwise, the bull market is likely to persist.
For investors engaging in momentum breakout setups, the importance of having a well-defined trading plan and adhering to it cannot be overstated. Prudent risk management is essential in navigating the complexities of the financial market, especially in the context of momentum breakouts.
A few years ago, Zacks Investment Research offered a 30-day access to all its picks for a mere $1, with no further obligation. While some investors seized this exceptional opportunity, others hesitated, assuming there must be a catch. However, the motive was simple: to acquaint investors with Zacks’ portfolio services, such as Surprise Trader, Stocks Under $10, and Technology Innovators, which have yielded remarkable returns, closing 162 positions with double- and triple-digit gains in 2023.
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Shopify Inc. (SHOP) : Free Stock Analysis Report
Zillow Group, Inc. (ZG) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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