Even though the U.S. economy is recovering quickly from pandemic damages, several parts of the world are still dealing with a resurgence of COVID-19 cases. The U.S. markets are exhibiting significant volatility as investors weigh the Biden administration’s tax hike proposal and several other issues. However, corporate earnings have so far been encouraging. .
So, in this environment, investors are increasingly focusing on momentum investment strategies because these stocks that have managed to generate significant returns over the past few months amid market volatility and could continue to do so in the near-term. Investors’ interest in the momentum stocks is evidenced by iShares MSCI USA Momentum Factor ETF’s (MTUM) 10.1% returns over the past month versus SPDR Portfolio S&P 500 Growth ETF’s (SPYG) and SPDR Portfolio S&P 500 Value ETF’s (SPYV) 8% and 2.7% gains, respectively over the same period.
CNOOC Limited (CEO), O’Reilly Automotive, Inc. (ORLY), and Corning Incorporated (GLW) have experienced decent momentum over the past few months and should keep rallying. So, it could be wise to scoop up these stocks now.
CNOOC Limited (CEO)
Based in Hong Kong, CEO is an investment holding company that is mainly engaged in the exploration, production and trading of oil and gas. It is the largest producer of offshore crude oil and natural gas in China and one of the largest independent oil and gas exploration and production companies in the world. The company operates primarily through three segments—Exploration and Production, Trading, and Corporate.
On March 15, CEO announced that its Caofeidian 6-4 oilfield had commenced production. The Caofeidian 6-4 oilfield promotes green and low-carbon production and aims to achieve zero discharge of production and living sewage into the sea. This is expected to drive increased production by the company.
In February, the company announced that it had made a large-sized oil and gas discovery, Bozhong 13-2 in Bohai Bay. Zhou Xinhuai, the general manager of the CEO’s Exploration Department said that, “The successful exploration of Bozhong 13-2 structure is another remarkable exploration achievement for the company,” with regard to the continuous enhancement of its efforts in oil and gas exploration and production in offshore China.
CEO’s revenue increased 28.8% year-over-year to $7.68 billion for its fiscal year 2021 first quarter, ended March 31, 2021. The company’s crude and liquids segments’ sales increased 33.4% year-over-year. Moreover, its average realized oil price grew 20.5% year-over-year to $59.07/bbl.
Analysts expect CEO’s EPS and revenue to increase 160.5% and 44%, respectively, year-over-year in its fiscal year 2021. The stock has gained 32.9% year-to-date and has surged more than 17% over the past three months.
CEO’s POWR Ratings reflect this promising outlook. The company has a B overall rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Momentum and Sentiment, and a B grade for Stability and Quality. Within the B-rated Foreign Oil & Gas industry, CEO is ranked #5 of 55 stocks.
To see the additional POWR Ratings for CEO (Growth and Value), click here.
O’Reilly Automotive, Inc. (ORLY)
Founded in 1957, ORLY is a retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. It operates more than 5,594 stores across 47 U.S. states and 22 ORMA stores in Mexico. The company provides new and remanufactured automotive hard parts, maintenance items, and accessories and its stores offer auto body paint and related materials, automotive tools, and professional service provider service equipment.
ORLY’s store sales increased 24.8% year-over-year to $3.09 billion for the first quarter ended March 31, 2021. Its operating profit grew 63.2% year-over-year to $691.1 million. And its EPS increased 77.8% year-over-year to $7.06.
Analysts expect ORLY’s EPS and revenue to increase 5.6% and 11.1%, respectively, year-over-year in its fiscal year 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. ORLY has been exhibiting strong momentum. The stock has gained 19.6% over the past six months and closed yesterday’s trading session at $528.95. Over the past three months, the stock has gained 22.4%.
ORLY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has an A grade for Momentum and Quality, and a B grade for Sentiment.
Corning Incorporated (GLW)
GLW manufactures specialty glass and ceramics. It operates through five segments—Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials and Life Sciences. The company’s offerings include glass substrates, cable assemblies, filter products, fluoride crystals, plastic vessels and various other products.
This month, GLW announced the next phase in its long-term relationship with Samsung Display Co., Ltd., a leading display technologies innovator. The partnership is expected to increase its customer base and help develop and manufacture more innovative products.
On March 26, GLW announced it will receive $57 million in additional funding from the Biomedical Advanced Research and Development Authority. GLW is expected to further increase its domestic manufacturing capacity for pharmaceutical glass tubing and vials to support accelerated mass vaccination efforts.
GLW’s net sales increased 29% year-over-year to $3.29 billion for the quarter ended March 31, 2021. Its gross profit increased 106.1% year-over-year to $1.16 billion. The company’s net income came in at $599 million compared to a net loss of $96 million in the prior-year period. And its core EPS increased 125% year-over-year to $0.45.
Analysts expect GLW’s EPS and revenue to increase 32.6% and 17.2%, respectively, year-over-year for the quarter ending September 30, 2021. It surpassed consensus EPS estimates in each of the trailing four quarters. The stock has gained 21.7% over the past three months and closed yesterday’s trading session at $44.36. Over the past six months, the stock has gained 39.8%. In fact, GLW is currently trading quite close to its $46.82 52-week high.
It’s no surprise that GLW has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Momentum and Growth, and a B grade for Sentiment and Quality.
CEO shares were trading at $121.76 per share on Thursday afternoon, up $2.07 (+1.73%). Year-to-date, CEO has gained 32.85%, versus a 12.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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