While several major economies are now reopening, the stock market is far stable. Last week, the Federal Reserve signaled that it would hold benchmark interest rates near zero for now, but the central bank forecasts two rate hikes by the end of 2023. This indicates the Fed’s concerns over inflation. Indeed, the central bank has raised its inflation projections for 2021 to 3.4% from its 2.4% prior estimate.
Consequently, the stock market is expected to remain volatile. Against this backdrop, stocks that have gained momentum lately could be appropriate bets because their momentum is expected to continue irrespective of market volatility. Investors’ interest in the momentum stocks is evident in the iShares MSCI USA Momentum Factor ETF’s (MTUM) and the Invesco DWA Momentum ETF’s (PDP) 3% and 4.6% gains, respectively, over the past month. This compares to the SPDR S&P 500 Trust ETF’s (SPY) 1.9% returns.
EOG Resources, Inc. (EOG), Canadian Natural Resources Limited (CNQ), and Generac Holdings Inc. (GNRC) have generated solid momentum and we think that their fundamental strength should help them to continue rallying, dodging the market’s volatility. So, it would be wise to bet on them now.
EOG Resources, Inc. (EOG)
As one of the largest crude oil and natural gas exploration and production companies in the United States, EOG explores for, develops, produces and markets crude oil and natural gas. The Houston, Tex.,company has proved reserves in the United States, Trinidad, and China.
EOG’s total revenue came in at $3.69 billion for the first quarter, ended March 31, 2021, which represents a 24.6% sequential rise. Its non-GAAP net income increased 197.5% year-over-year to $946 million. Its non-GAAP EPS came in at $1.62, up 194.5% year-over-year. The company’s net debt was reduced by 24.6% year-over-year to $1.75 billion.
For the current quarter, ending June 30, 2021, analysts expect EOG’s EPS and revenue to increase 708.7% and 249.1%, respectively, year-over-year to $1.40 and $3.85 billion. Moreover, the company surpassed consensus EPS estimates in three of the trailing four quarters.
EOG has declared a $0.41 per share regular dividend and a special dividend of $1.00 per share, both payable on July 30, 2021. EOG CEO William R. Thomas said, “Our outstanding first quarter results and special dividend announcement reflect the power of EOG’s returns-focused strategy.”
The stock has gained 71.1% over the past six months and 23% over the past three months to close yesterday’s trading session at $85.70. It is currently trading above its $82.86 and $68.32 50-day and 200-day respective moving averages, indicating an uptrend.
It’s no surprise that EOG has an overall B rating, which equates to Buy in our POWR 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 a B grade for Quality, Growth, and Sentiment. Click here to see EOG’s ratings for Value and Stability also.
EOG is ranked #18 of 95 stocks in the Energy- Oil & Gas industry.
Canadian Natural Resources Limited (CNQ)
Crude oil and natural gas exploration, development and production company CNQ operates through three geographic segments: North America, North Sea and Offshore Africa. The Calgary, Canada company’s offerings include synthetic crude oil (SCO), light and medium crude oil, bitumen (thermal oil), primary heavy crude oil, and Pelican Lake heavy crude oil.
For the first quarter, ended March 31, 2021, CNQ’s revenue increased 46.8% year-over-year to CAD 6.61 billion ($5.37 billion). The company’s net earnings came in at CAD 1.38 billion ($1.12 billion) compared to a CAD 1.28 billion ($1.04 billion) loss in the prior-year quarter. Its EPS was CAD 1.16 ($0.94) compared to a CAD 1.08 ($0.88) loss per share in the year-ago period.
Analysts expect CNQ’s annual revenue to increase 57% year-over-year to $20.93 billion in its fiscal year 2021. Its EPS is expected to increase 1,038.5% year-over-year to $0.96 for the quarter ending September 30, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters.
CNQ, along with other companies, including Cenovus Energy Inc. (CVE) and Suncor Energy Inc. (SU), on June 9 announced the Oil Sands Pathways to Net Zero initiative. The companies intend to work collectively with the federal and Alberta governments and achieve net zero greenhouse gas (GHG) emissions from oil sands operations by 2050, consistent with Canada’s climate goals.
The stock has rallied 50.9% over the past six months to close yesterday’s trading session at $36.28. CNQ has also gained 25.5% over the past three months. It is currently trading above its $35.20 and $29.56 respective 50-day and 200-day moving averages.
CNQ’s POWR Ratings reflects this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. It has an A grade for Momentum, Sentiment, and Growth, and a B grade for Quality. In addition to these ratings, one can see CNQ’s ratings for Stability and Value here.
CNQ is ranked #3 of 50 stocks in the Foreign Oil & Gas industry.
Generac Holdings Inc. (GNRC)
GNRC in Waukesha, Wisconsin designs and manufactures power generation equipment and other engine powered products. The company operates through two segments: domestic and international. It serves the residential, light commercial, industrial, oil and gas, and construction markets.
The company’s $807.43 in net sales for the first quarter (ended March 31, 2021) represents a 69.7% year-over year increase. GNRC’s net income for the quarter was $149.95 million, up 245.4% year-over-year. Its adjusted EPS was $2.38, representing a 173.6% year-over-year increase.
GNRC’s EPS is expected to increase 64.3% year-over-year to $2.30 for the current quarter, ending June 30, 2021. It surpassed consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 57.9% year-over-year to $863.41 million in the current quarter.
On June 1, 2021, GNRC completed its acquisition of Deep-Sea Electronics Limited, which is an advanced controls designer and manufacturer. The acquisition is expected to help the company expand its internal capacity in the field of controls & automation and drive innovation and speed-to-market across its product development cycles.
The stock has gained 33.8% over the past three months and 31.6% over the past month to close yesterday’s trading session at $406.12. GNRC is currently trading significantly above its 50-day and 200-day moving averages of $329.66 and $299.08, respectively.
GNRC’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which translates to Buy in our POWR Ratings system. The stock has an A grade for Momentum, Sentiment, and Quality, and a B Grade for Growth. Click here to see the additional ratings for GNRC (Stability and Value).
GNRC is ranked #40 of 84 stocks in the A-rated Industrial-Machinery industry.
Want More Great Investing Ideas?
EOG shares were trading at $84.92 per share on Thursday morning, down $0.78 (-0.91%). Year-to-date, EOG has gained 72.30%, versus a 14.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|EOG||Get Rating||Get Rating||Get Rating|
|CNQ||Get Rating||Get Rating||Get Rating|
|GNRC||Get Rating||Get Rating||Get Rating|