Impressive third-quarter earnings, rising consumer spending, and declining jobless claims have helped the major benchmark stock indexes hit record highs lately. However, with inflation hitting a 31-year high, unabated supply chain disruptions, and the Federal Reserve’s decision to start tapering its bond-buying later this month, the stock market might witness significant volatility in the near term. A potential slowdown of China’s economy due to its zero-COVID strategy could hurt the global economic recovery, impacting the stock market further.
Amid this scenario, we think betting on momentum stocks could help dodge short-term market fluctuations. Investors’ interest in momentum stocks is evident in the JPMorgan U.S. Momentum Factor ETF’s (JMOM) 8.4% returns versus SPDR S&P 500 Trust ETF’s (SPY) 5.9% gains over the past month.
The shares of Linde plc (LIN), Eaton Corporation plc (ETN), Waste Management, Inc. (WM), and Eni S.p.A. (E) have gained momentum lately, which the companies are well-positioned to maintain for the rest of the year. Therefore, we think it could be wise to bet on these stocks now.
Linde plc (LIN)
Based in the U.K.,LIN is an industrial gas and engineering company that offers atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, hydrogen, helium, electronic and specialty gases, acetylene) internationally. The company also designs and constructs turnkey process plants, such as olefin, natural gas, air separation, and hydrogen and synthesis gas. It serves the healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, electronics, chemical, and water treatment industries.
On October 21, LIN opened a new, world-scale hydrogen production facility in Texas, bringing LIN’s total U.S. Gulf Coast hydrogen capacity to approximately 1.5 billion cubic feet per day. Supported by multiple supply sources and an innovative high-purity hydrogen storage cavern, the new plant has started supplying high-purity hydrogen to the Phillips 66 Company’s (PSX) Sweeny Refinery. It expects to provide a reliable long-term supply of hydrogen to other customers in the region.
On September 13,LIN revealed its plans to increase production capacity at its air separation plant in Mims, Fla., by 50%. The expansion, which is expected to be completed in 2023, will enable LIN to meet the rapidly growing demand for industrial gases from all end markets throughout the region.
For its fiscal third quarter, ended September 30, 2021, LIN’s revenue increased 11.9% year-over-year to $7.67 billion. The company’s adjusted operating profit came in at $1.81 billion, indicating a 19.5% rise from the prior-year period. LIN’s adjusted income from continuing operations was $1.42 billion for the quarter, marking a 24.6% year-over-year improvement. Its adjusted EPS improved 27% year-over-year to $2.73. The company had $4.70 billion in cash and cash equivalents as of September 30, 2021.
Analysts expect LIN’s EPS to improve 28.6% year-over-year to $10.59 in the current year. Its $30.22 billion consensus revenue estimate for the current year represents a 10.9% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters.
The stock has gained 28.5% in price over the past year and 13.7% over the past month. LIN closed yesterday’s trading session at $336.62 and is currently trading above its $310.92, 50-day moving average and 200-day moving average of $302.13.
LIN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Momentum, and a B grade for Stability, Sentiment, and Quality. Click here to see the additional ratings for LIN’s Growth and Value. Of the 89 stocks in the A-rated Chemicals industry, LIN is ranked #32.
Eaton Corporation plc (ETN)
ETN is a Dublin, Ireland-based power management company that manufactures engineered products for the industrial, vehicle, construction, commercial, and aerospace markets. The company operates through six segments—Electrical Americas; Electrical Global; Hydraulics; Aerospace; Vehicle; and eMobility. It offers hydraulic products and fluid connectors, electrical power distribution and control equipment, truck drivetrain systems, and engine components.
On October 26, 2021, ETN’s eMobility segment introduced its EVK Series, a new line of Bussmann series high-voltage fuses. These fuses offer full-range protection for the charging systems of electric commercial, passenger, and high-performance vehicles, enable more advanced EV system architectures, and support vehicle acceleration and range. ETN expects to witness great demand for this series in the coming months.
On October 7, ETN’s Vehicle Group launched two aftermarket ELocker differentials for Jeep Wrangler JL and Jeep Gladiator JT equipped with both manual and automatic transmissions. Requiring only a wire to actuate, this electric locking differential’s net-forged gears and electronic controls offer strength, durability, reliability, and full control and traction. The product is likely to see great demand from jeep enthusiasts in the near term.
ETN’s net sales improved 8.8% year-over-year to $4.92 billion for its fiscal third quarter, ended September 30, 2021. The company’s pre-tax income came in at $1.11 billion, indicating a 112% rise from the prior-year period. While its adjusted net earnings increased 28.7% year-over-year to $701 million, its adjusted EPS increased 29.6% to $1.75. The company had $271 million in cash as of September 30, 2021.
Analysts expect ETN’s EPS to improve 56.6% year-over-year to $6.64 for the current year. The stock surpassed consensus EPS estimates in each of the trailing four quarters. Analysts expect the stock’s revenue to grow 10.8% year-over-year to $19.79 billion.
ETN has gained 49.6% in price over the past year and 11.9% over the past month. The stock ended yesterday’s trading session at $171.87 and is currently trading above its 50-day moving average of $159.76 and 200-day moving average of $155.14.
ETN’s POWR Ratings reflect this promising outlook. The stock has a B grade for Momentum, Stability, and Quality. Click here to see the additional ratings for ETN’s Growth, Value, and Sentiment.
ETN is ranked #30 of 80 stocks in the B-rated Industrial – Machinery industry.
Waste Management, Inc. (WM)
WM in Houston, Tex., provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, and disposal services of waste and recyclable materials, recycling brokerage services, owns, develops, operates landfill gas-to-energy facilities, and operates transfer stations.
For its fiscal first quarter, ended July 31, 2021, WM’s total revenue increased 20.8% year-over-year to $4.67 billion. The company’s adjusted income from operations came in at $792 million, indicating a 9.8% improvement from the prior-year period. WM’s adjusted net income was $530 million, up 14% from the prior-year period. Its adjusted EPS increased 15.6% year-over-year to $1.26. WM had $116 million in cash and cash equivalents as of September 30, 2021.
Analysts expect the stock’s EPS to grow 20.6% year-over-year to $4.86 in the current year. A $17.87 billion consensus revenue estimate for the current year represents a 17.4% rise from the prior-year period. It surpassed consensus EPS estimates in three of the trailing four quarters. Analysts expect the stock’s EPS to grow at a 15.4% rate per annum over the next five years.
WM has gained 31.4% in price over the past year and 4.8% over the past month. The stock ended yesterday’s trading session at $162.08 and is currently trading above its 50-day moving average of $156.41 and 200-day moving average of $147.96.
It is no surprise that WM has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has a B grade for Momentum, Quality, and Stability. Click here to see the additional ratings for WM (Growth, Value, and Sentiment).
Of the 16 stocks in the B-rated Waste Disposal industry, WM is ranked #3.
Eni S.p.A. (E)
Headquartered in Rome, Italy, E explores for, develops, and produces hydrocarbons, crude oil, natural gas, and power. The company operates through five segments—Exploration & Production; Global Gas & LNG Portfolio; Refining & Marketing; Chemicals; and Eni gas e luce, Power & Renewables. As of December 31, 2020, it had net proven reserves of 6,905 million barrels of oil equivalent; and an installed operational capacity of 4.6 GW.
On November 11, E’s Eni gas e luce subsidiary signed with Zouk Capital and Aretex to acquire Be Power, an Italian electric mobility company. Be Power’s acquisition will enable Eni gas e luce to install and manage the charging infrastructure on public and private land through a proprietary technology platform and provide charging services through a dedicated app. E expects to gain expanded market reach in the coming months.
On November 4, 2021, E and Air Liquide, a French multinational company that supplies industrial gases and services, joined forces, and signed a letter of intent to support hydrogen mobility and deploy hydrogen refueling stations in Italy to decarbonize the transport segment. The two companies have entered a partnership to invest in developing the infrastructure necessary to allow the expansion of hydrogen mobility in Italy. For its fiscal third quarter, ended August 31, 2021, E’s total revenues came in at €19.25 billion ($22.06 billion), representing an 83% rise from the prior-year period. The company’s adjusted operating profit came in at €2.49 billion ($2.86 billion), up 12% from the prior-year period. Its adjusted net profit was €1.44 billion ($1.65 billion), compared to a €151 million ($173.01 million) loss. Its EPS came in at €0.33, versus a €0.14. loss per share. And as of September 30, 2021, the company had €7.36 billion ($8.44 billion) in cash and cash equivalents.
A $82.42 billion consensus revenue estimate for the current year represents a 54.6% rise from the prior-year period. E has gained 59.2% in price over the past year and 5.5% over the past month. The stock ended yesterday’s trading session at $28.97 and is currently trading above its 50-day moving average of $27.86 and 200-day moving average of $25.40.
E’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to Buy in our proprietary rating system. E has a B grade for Growth, Momentum, Sentiment, and Stability. In addition to the POWR Ratings grades we have just highlighted, one can see E’s Value and Quality here.
E is ranked #9 of 49 stocks in the A-rated Foreign Oil & Gas industry.
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LIN shares were unchanged in after-hours trading Thursday. Year-to-date, LIN has gained 28.81%, versus a 25.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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