Stocks are off to a strong start in 2023 following last year's rough loss. The S&P 500 fell about 19% in calendar 2022. But this year, it is up about 9.5% so far thanks to outperformance in a number of momentum stocks.
This may surprise some armchair investors, who continue to fret over the impact of inflation on consumer confidence and the weight of higher borrowing costs on corporate spending.
But historically, the stock market has had no trouble climbing the so-called "wall of worry," when investors have confidence in long-term growth potential even in the face of short-term negativity.
The following nine momentum stocks are perfect illustrations of this. There are some potential speed bumps ahead, sure, but generally speaking these stocks all have a tremendous track record of multi-year growth, as well as near-term momentum that indicates a bright future.
Past performance never guarantees future returns, of course. But if you're looking to play what's hot right now based on recent momentum on Wall Street, these nine picks are worth your consideration. In addition to strong share-price trends, we looked for the best stocks to buy, according to the analyst crowd, so each name featured here boasts a Buy or Strong Buy rating.
With that in mind, here are nine of the best momentum stocks to buy now.
Data is as of May 26. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Analyst ratings courtesy of S&P Global Market Intelligence, unless otherwise noted. Stocks are listed by analysts' consensus recommendation, from lowest to highest.
- Industry: Gambling
- Market value: $10.8 billion
- Dividend yield: N/A
- Analysts' consensus rating: 2.03 (Buy)
One of the top momentum stocks on Wall Street this year is online sports betting operator DraftKings (DKNG, $23.38). DKNG stock has seen its shares double since Jan. 1 – and there are no signs that it's slowing down.
Part of this is simply because of the megatrend of sports betting and related fantasy sports apps that continue to be a huge draw. After all, widespread legalization of sports betting occurred in 2021, and the first online sportsbook only launched at the beginning of 2022. This means there is still a lot of growth yet to come in this industry.
But specific to DraftKings, the hard numbers show this firm is flexing its muscles to push out the competition. Its first-quarter financial results in May showed massive 57% year-over-year growth in new users, even as its customer acquisition cost dropped by 27%. The company raised its full-year guidance as a result, and shares soared more than 15% in a single session on the news.
Looking ahead, DraftKings tends to make the most of the NFL schedule – and seeing as the preseason is still a few months away, these new users are coming at the perfect time to add fuel to the fire this fall. While sports betting may seem ripe for a cutback when people face economic uncertainty, we've seen no signs as of yet that consumers are pulling back as DKNG continues to power to new highs.
Argus Research analyst John Staszak agrees. "Based on management's growth initiatives and increased demand for online sports betting, we think that the shares can move higher," Staszak writes in a note to clients. The analyst has a Buy rating on the consumer discretionary stock with a $29 price target, representing implied upside of 24% from current levels.
- Industry: Specialty retail
- Market value: $23.2 billion
- Dividend yield: 2.0%
- Analysts' consensus rating: 1.97 (Buy)
Sure, it might sound crazy that in the age of e-commerce we have a brick-and-mortar retailer on this list of top momentum stocks – and a mid-sized niche player at that. However, Tractor Supply (TSCO, $211.50) continues to prove that its old school model has lasting appeal. This is particularly true in rural American marketplaces where its brand remains very strong and some of the goods it delivers simply can't be delivered from an Amazon (AMZN) warehouse.
Tractor Supply offers specialized power equipment and agricultural tools, animal feed, ranching gear and other goods that might not be mainstays of the local shopping mall, but are vital to smaller farming communities in the U.S. And with a unique model that makes it part agricultural supplier, part hardware store and part big-box retailer, TSCO knows how to get the most out of every customer that walks in its doors.
The long-term growth story speaks for itself, with TSCO revenue jumping from about $7.9 billion in fiscal 2018 to $14.2 billion in fiscal 2022. And looking forward, Wall Street analysts are expecting the company to top $16.2 billion in sales by the end of fiscal 2024.
Shares are up an impressive 200% or so in the last five years, and recently set a new 52-week high on continued success in 2023. Some retail or consumer names rotate quickly in and then out of favor, but Tractor Supply seems to be a stock with a durable growth story investors can believe in for many years to come.
- Industry: Internet content & information
- Market value: $29.1 billion
- Dividend yield: N/A
- Analysts' consensus rating: 1.94 (Buy)
Streaming radio giant Spotify Technology (SPOT, $150.31) is a gravity-defying stock that continues to set new 52-week highs like clockwork. It's up an amazing 90% since Jan. 1 to log one of the best performances on Wall Street this year – and SPOT has plenty of fuel left in its tank.
Those with longer memories may recall that way back in 2018, when Spotify made waves for its rather unique "direct listing" IPO format. Shares first traded at around $162 apiece – which is still slightly above current levels for this stock.
This give-and-take is common for investments like Spotify. Whether you see the stock as a high-growth play with a lot of long-term potential or a fashionable but unprofitable boondoggle depends largely on your personal perspective.
For instance, Spotify's April earnings report showed it now has 515 million monthly active users, a 22% increase over Q1 of last year. On the other hand, its ratio of paid premium listeners to "free" ad-supported listeners is declining even as these individual metrics grow.
Now that Spotify is back around where it began its journey as a publicly traded stock, more investors are watching it. And bigger picture, even if you don't own SPOT stock, you may be interested in whether it continues to run as a general indicator of how much optimism is out there right now for growthy momentum stocks.
- Industry: Internet content & information
- Market value: $671.5 billion
- Dividend yield: N/A
- Analysts' consensus rating: 1.84 (Buy)
Facebook parent Meta Platforms (META, $262.04) has had its fair share of troubles over the last year or two. These range from privacy concerns to disappointing returns from its augmented reality and metaverse investments to increased competition from competitors like Snap (SNAP) and Chinese upstart TikTok. But things are looking up. In fact, META has been one of the top momentum stocks out of all the components in the S&P 500, with shares roughly doubling since Jan. 1
That's in part thanks to improving fundamentals. For instance, when Meta reported its Q1 earnings at the end of April, the social media giant demonstrated better-than-expected sales even as a weak ad environment weighed on other digital media players at the same time.
What's more, the company signaled a move away from the big spending on metaverse applications to artificial intelligence (AI) investments that seem in-line with its peers – and much more comforting to Wall Street.
Year-over-year comparisons for META's Q1 weren't great on the bottom line thanks to a slump in advertising spending brought on by a weaker global economy and a shift away from screen time now that COVID-19 restrictions are well in the rearview mirror. Still, Meta remains a dominant force in social media and communication services stocks, and it's a well-run tech company that holds promise in the long term. Given recent performance, it may be time to reconsider this one-time darling based on its ambitious plans for future growth.
- Industry: Consumer electronics
- Market value: $2.76 trillion
- Dividend yield: 0.6%
- Analysts' consensus rating: 1.80 (Buy)
When it comes to the best growth stocks, it's hard to overlook Apple (AAPL, $175.43) as an obvious choice. The tech giant topped $1 trillion in market capitalization back in 2018, and just five years later is now valued at roughly $2.7 trillion! This proves that you don't have to choose between massive scale and continued expansion when it comes to AAPL stock.
We don't need to cover the disruptive history of Apple since investing is fundamentally about the future and not the past. So let's just focus on what's in front of us to illustrate why this stock is worth owning right now. Most recently, Apple announced impressive earnings at the beginning of May that showed sales of its all-important iPhone topped $50 billion on a quarterly basis for the first time.
On top of this thriving smartphone business, management also pointed to strong response for its new high-yield savings account plan. Apple has already begun to ramp up its "services" business via Apple TV and Apple Music, so an entry into financial services could open up even more paths to growth in the years ahead.
That's sure to fuel even bigger returns in the months and years to come. And on top of that, AAPL announced plans to repurchase $90 billion of its own stock to further prop up its share price.
Small wonder Apple is one of the top momentum stocks right now, up more than 35% since Jan. 1. What's more, it continues to be on many growth investors' "must own" lists.
- Industry: Software – infrastructure
- Market value: $53.2 billion
- Dividend yield: N/A
- Analysts' consensus rating: 1.80 (Buy)
Fortinet (FTNT, $67.77) is one of the largest cybersecurity companies on the planet, with a market capitalization of more than $50 billion and roughly 650,000 customers worldwide. And unlike other Big Tech players that dabble in cybersecurity, FTNT is primarily focused on this important area – which is a great thing to consider right now amid the constant and growing concerns of cyber risks.
As illustration of this, Fortinet is riding a revenue trend of $4.4 billion in sales last fiscal year. This is projected to grow to about $5.5 billion this year, and hit $6.5 billion by the end of 2024.
That sales expansion has naturally fueled strong share appreciation as well, making FTNT one of the best momentum stocks this year. Indeed, shares are up an impressive 35% or so since Jan. 1. But the growth story here is definitely a longer-term one, with shares up 450% in the last five years.
In the wake of Russia's invasion of Ukraine and the related uptick of cyber risks worldwide, it's more than likely that spending will continue to ratchet higher in this area. Fortinet is one of the best cybersecurity stocks to benefit from this long-term trend, in addition to having specific growth potential thanks to its dominance and short-term momentum.
- Industry: Semiconductors
- Market value: $963.2 billion
- Dividend yield: 0.04%
- Analysts' consensus rating: 1.56 (Buy)
Nvidia (NVDA, $389.46) is the preeminent semiconductor stock – and, more recently, one of Wall Street's best AI stocks. NVDA pioneered the modern graphics processing unit and continues to be a dominant force in cutting edge technology, from cryptocurrency mining to artificial intelligence hardware. That's because Nvidia's patented designs are efficient and powerful chips that can support a huge stream of data or complex and simultaneous calculations – factors that are must-haves for next-gen technologies.
Shares have soared more than 500% in the last five years, from a split-adjusted price in the low $30 range at the end of 2018 to roughly $400 a share at present. But with consistent growth ahead, including projections of 58% revenue growth this fiscal year followed by 27% growth next year, NVDA stock shows no signs of slowing down – or falling off this list of top momentum stocks.
To be clear, there are broad challenges to many chipmakers that are peers of Nvidia as they struggle amid weak PC and data center markets, as well as lingering supply-chain issues. But NVDA keeps putting up the numbers to show it has staying power, including giving an impressive AI outlook in its most recent earnings report. And with momentum at its back, NVDA could be a stock to consider right now if you're into risk-on plays across the tech sector.
- Industry: Medical devices
- Market value: $44.6 billion
- Dividend yield: N/A
- Analysts' consensus rating: 1.52 (Buy)
DexCom (DXCM, $115.05) is a specialized medical device company riding a global megatrend in diabetes diagnoses and blood sugar management needs. More than 500 million people worldwide suffer from diabetes, according to the International Diabetes Federation, and that number continues to grow. This creates both an uptrend in the potential market, as well as a reliable need for regular products and services to meet this widening patient pool.
DXCM's flagship products include real-time continuous glucose monitoring that helps to simplify diabetes management. In addition to the devices themselves, DexCom also allows people to sync their monitors with digital health apps and smart devices for data analysis.
These best-in-class products have helped fuel strong and consistent growth, as revenue has soared from $1 billion in 2018 to $2.9 billion in fiscal 2022 and is now projected to top $4.2 billion by the end of fiscal 2024.
And after a Q1 earnings report in April that showed 19% year-over-year organic revenue growth, those projections seem very achievable – particularly amid the tailwind of long-term demographic and health trends behind DXCM.
"We continue to see multiple pathways for upside, would be buyers on weakness and view DXCM as a top pick," says Jefferies analyst Matthew Taylor (Buy). "We think investors are missing DXCM's underlying volume growth and diminishing price/mix headwinds, which should start to show through the year."
- Industry: Auto manufacturers
- Market value: $27.6 billion
- Dividend yield: N/A
- Analysts' consensus rating: 1.40 (Strong Buy)
Never heard of Li Auto (LI, $28.16)? Well, it might be time to start paying attention. This electric vehicle manufacturer in the People's Republic of China continues to make waves with its Li ONE and Li L series of smart electric vehicles. And it might represent one of the more dynamic opportunities out there to cash in on the EV revolution.
The company is still modest in size, but has been consistently topping expectations in its production and profit reports. This includes its April numbers where the firm delivered more than 25,000 vehicles to top analyst expectations of about 22,000 units – and up significantly from the mere 4,000 or so delivered in April 2022.
What makes these numbers even more impressive are big-picture fears of generally slowing EV demand in China, as well as robust competition in the marketplace.
The icing on the cake is that Li recently reported positive income from operations as it looks for consistent profitability.
The electric vehicle landscape is admittedly still evolving and difficult to predict, particularly in China. But a company like Li that continues to top production targets is definitely worth watching as both an indicator of this industry's overall health as well as a potential investment opportunity.
As for its place on this list of top momentum stocks, LI is up more than 38% for the year-to-date and analysts see more gains ahead. Indeed, the consensus price target of $39.11 represents expected upside of nearly 40% over the next 12 months or so.
