In this article, we will take a look at 14 best short-term stocks to invest in. To skip our analysis of the recent market activity, you can go directly to see the 5 Best Short-Term Stocks to Invest In.
Momentum investing is a key strategy used for short term investments, typically grouped in with other technical research strategies used in “trading”. Simply put, momentum investing seems to follow one of the most basic laws of physics, Newton’s first law of motion: “an object at rest remains at rest, and an object in motion remains in motion at constant speed and in a straight line unless acted on by an unbalanced force.”
Similar to this law, momentum investing believes in the rationale that stocks that are going up will keep going up while the ones that are down will remain down in the near term, until they have hit their peak, or trough. The key to benefiting from this strategy is in knowing when to exit a position to pocket the profits and avoid losses before the prices come down. For this purpose, different indicators that depict the quality of the stock as well as individual characteristics of the stock, combined with the current momentum can provide good results.
There are different indicators and metrics that can be assessed to identify stocks with price momentum. Some of the commonly used indicators among technical analysts include stochastic oscillator, relative strength index (RSI), as well as other tools. For the purpose of this list, we have used a simple rate of change criterion combined with the individual quality of the stocks. We have picked stocks that have incurred significant losses in the last 12 months to identify stocks with low values and then we have filtered these to get to stocks that are on the uptrend and have gained value in the past 3 months.
One of the largest momentum ETFs, iShares MSCI USA Momentum Factor ETF, hasn’t posted good results in the past year. The ETF tracks seeks to track the investment results of an index composed of U.S. large- and mid-capitalization stocks exhibiting relatively higher price momentum and has generated a return of -5.1% over the period of last one year, as of October 31. On the other hand, if we look at the long-term performance of the ETF, it has generated a return of 11.14% since inception in April 2013.
The iShares MSCI USA Momentum Factor ETF currently has net assets of more than $8.2 billion and comprises 123 holdings. GPU-maker NVIDIA Corporation (NASDAQ:NVDA), social media giant Meta Platforms, Inc. (NASDAQ:META), and software maker Microsoft Corporation (NASDAQ:MSFT), are the top three holdings of the ETF.
Even though short-term investing, or trading, promises excellent returns in a short time period, it has its own inherent risks and can lead to losses if not done carefully. For the risk averse investors, a better option is to invest for long-term which is a more stable and proven method of wealth creation without much active management. You can read more about this in our recent article: 12 Best Performing S&P 500 Stocks in the Last 10 Years
Our list of 14 Best Short-Term Stocks to Invest In includes leading companies across multiple sectors, including leading satellite communications provider Globalstar, Inc. (NYSE:GSAT), telecommunications giant AT&T Inc. (NYSE:T), leading media house The Liberty SiriusXM Group (NASDAQ:LSXMA), and health care enterprise Centene Corporation (NYSE:CNC), among others.
Best Short-Term Stocks to Invest In
Photo by Ruben Sukatendel on Unsplash
Methodology
For our list of 14 best short-term stocks to invest in, we have selected price momentum stocks that have posted 3-month gains above 10% and one-year declines also above 10%, as of November 21. To ensure we have selected the best stocks, the stocks picked for the list have positive analyst ratings and average analyst price targets with upside potential. We have only picked companies with market capitalizations of more than $2 billion for the list. We have also provided Insider Monkey’s hedge fund data for the third quarter to show the popularity of these stocks among the 910 hedge funds tracked by Insider Monkey.
Shanghai, China-based Zai Lab Limited (NASDAQ:ZLAB) is a commercial-stage, global biopharmaceutical company focused on medicines for oncology, autoimmune disorders, infectious diseases, and neurological disorders.
The product portfolio of Zai Lab Limited (NASDAQ:ZLAB) comprises of five commercialized products, including Zejula® for ovarian cancer, Optune®, Qinlock®, NUZYRA®, and VYVGART®. In addition, its product pipeline includes potentially global best-in-class and/or first-in-class therapies.
On November 7, Zai Lab Limited (NASDAQ:ZLAB) released its financial results for Q3 2023. Its revenue, at $69 million, exceeded consensus estimates by $2.6 million, while normalized EPS, at -$0.71, surpassed estimates by $0.32.
Following the earnings release, Citi lowered the price target on Zai Lab Limited (NASDAQ:ZLAB) shares to $123 from $128 and maintained a ‘Buy’ rating on the shares. The analyst expects the commercial uptake of VYVGART to be the key focus for the stock in the near term.
13. Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI)
3-Month Return as of November 21:12.91%
One-Year Return as of November 21:-23.70%
Number of Hedge Fund Holders: 16
Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI), based in Annapolis, Maryland, is a leading climate positive investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. It had nearly $11.5 billion of managed assets, as of September 30, 2023.
On November 2, Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI) released its financial results for Q3 2023. Its revenues increased by 49% y-o-y to $90 million, while net income shrunk by 38% y-o-y to $23 million. At $0.62, the normalized EPS for the quarter surpassed consensus estimates by $0.09.
Concurrent with the quarterly performance release, the Board of Directors of Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI) declared a quarterly cash dividend of $0.395 per share. The expects growth of annual dividends per share to be at a compounded annual rate of 5% to 8%, from 2021 to 2024.
The Liberty SiriusXM Group (NASDAQ:LSXMA) comprises Liberty Media’s ownership in SiriusXM Holdings Inc. (NASDAQ:SIRI). Liberty Media owns 83.5% of SiriusXM which operates two audio entertainment businesses, SiriusXM and Pandora.
On September 26, Liberty Media proposed a combination of Liberty SiriusXM Group (NASDAQ:LSXMA) and SiriusXM Holdings Inc. (NASDAQ:SIRI) to form a consolidated company with a simplified ownership structure.
On November 3, The Liberty SiriusXM Group (NASDAQ:LSXMA) released its financial results for the third quarter of 2023. It generated total revenues of $2.2 billion and a net income of $307 million.
As of Q3 2023, 43 of the 910 prominent hedge funds tracked by Insider Monkey held shares of The Liberty SiriusXM Group (NASDAQ:LSXMA), worth $2.0 billion. Warren Buffett’s Berkshire Hathaway owned 43.2 million shares of the company valued at $1.1 billion.
Tacoma, Washington-based Columbia Banking System, Inc. (NASDAQ:COLB) is the parent company of Umpqua Bank, a western U.S. regional bank based in Lake Oswego, Oregon. Formerly the parent company of Columbia Bank, Columbia Banking System, Inc. (NASDAQ:COLB) merged with Umpqua Holdings Corporation to form a leading regional bank with more than $50 billion in assets, on March 1, 2023.
Columbia Banking System, Inc. (NASDAQ:COLB) has paid regular dividends for more than 20 years. On November 13, the Board of Directors of the company approved a quarterly cash dividend of $0.36 per share. The shares of the company had a dividend yield of 6.15%, based on the share price on November 21.
Columbia Banking System, Inc. (NASDAQ:COLB) shares have lost more than 34% of their value over the past year. The shares of the company has made a recovery since then and have gone up more than 13% in the last 3 months. In addition, the average analyst price target for the shares of the company represent a potential upside of nearly 10%, based on the share price on November 21.
Dallas, Texas-based AT&T Inc. (NYSE:T) is a leading telecommunications services provider with two operating segments: AT&T Communications which provides mobile and broadband services to more than 100 million consumers in the U.S.; and AT&T’s Latin America which offers mobile services to consumers and businesses in Mexico.
AT&T Inc. (NYSE:T) is making significant investments in its 5G and fiber connectivity for “durable, long-term growth”. The company made 296,000 net additions to AT&T Fiber during the third quarter. Its customer base has more than doubled during the last 4 years to 8 million AT&T Fiber subscribers.
AT&T Inc. (NYSE:T) delivered strong results in Q3 2023 with revenue up nearly 1% on a year-on-year basis. It generated $30.4 billion in net revenue and $3.5 billion in net income for the quarter. The company also announced a cash dividend of $0.2775 per share.
As of Q3 2023, AT&T Inc. (NYSE:T) shares were held by 56 hedge funds, second highest on our list of 14 best short-term stocks to invest in, with a total value of $1.4 billion. Arrowstreet Capital was its largest hedge fund shareholder with ownership of 30 million shares valued at $454 million.
Montréal, Québec-based Nuvei Corporation (NASDAQ:NVEI) is a financial technology company offering payment processing services. Its technology allows leading companies to accept next-gen payments, offer all payout options and benefit from card issuing, banking, risk, and fraud management services.
On November 7, Nuvei Corporation (NASDAQ:NVEI) released its financial results for Q3 2023. Its revenue increased by 55% y-o-y to $305 million, while it generated a net loss of $18 million. The normalized EPS for the quarter was $0.39, which missed consensus estimates by $0.01. The Board of Directors also declared a cash dividend of $0.10 per common share.
Past year hasn’t been good for Nuvei Corporation (NASDAQ:NVEI) as its shares lost nearly 36% of their value during the period. The stock seems to be on a recovery arc with nearly 15% of positive movement posted in the last 3 months while analysts still remain bullish about the stock. The average analyst price target for the stocks stands at $28.3 which represents a potential upside of 47%.
Established in 1852, The Hanover Insurance Group, Inc. (NYSE:THG) is a leading provider of property and casualty insurance to individuals, families, and businesses in the United States.
Worcester, Massachusetts-based The Hanover Insurance Group, Inc. (NYSE:THG) released its financial results for Q3 2023 on November 1. Its revenue increased by 11% y-o-y to $1.5 billion, while it generated a net income of $9 million. The EPS for the quarter was -$0.24, which missed consensus estimates by -$1.76.
Following the earnings release, Piper Sandler analyst Paul Newsome raised the price target for The Hanover Insurance Group, Inc. (NYSE:THG) shares to $143 from $138 and maintained an ‘Overweight’ rating. The price target represents a potential upside of nearly 19% based on the latest share price.
Like other stocks such as Centene Corporation (NYSE:CNC), AT&T Inc. (NYSE:T), and The Liberty SiriusXM Group (NASDAQ:LSXMA), the shares of The Hanover Insurance Group, Inc. (NYSE:THG) are among the Best Short-Term Stocks to Invest In.
Centene Corporation (NYSE:CNC), based in Saint Louis, Missouri, is a leading healthcare enterprise providing a full spectrum of managed healthcare products and services, primarily through Medicaid, Medicare, and commercial products.
On November 21, Cantor Fitzgerald analyst Sarah James reiterated an ‘Overweight’ rating for Centene Corporation (NYSE:CNC) shares with an unchanged price target of $82 which represents a potential upside of nearly 12%.
As of Q3 2023, 57 of the 910 hedge funds tracked by Insider Monkey owned shares of Centene Corporation (NYSE:CNC), valued at $2.3 billion. This makes Centene Corporation (NYSE:CNC) the most commonly held stock among hedge funds on our list of 14 best short term stocks to invest in. Its largest hedge fund shareholder was Quentin Koffey’s Politan Capital with ownership of 12.1 million shares valued at $836 billion.
In its Q3 2023 investor letter, Oakmark Funds, advised by Harris Associates, made the following comments about Centene Corporation (NYSE:CNC):
“Centene is one of the largest health insurers in the U.S. The company specializes in three major government-sponsored programs: Medicaid, Marketplace and Medicare Advantage. [. . .]Centene holds the #1 market share in both of these programs and is well positioned to capitalize on their continued growth. The stock trades for 10x consensus 2024 EPS, but this doesn’t tell the whole story. Past missteps in Centene’s Medicare business will result in that segment losing $0.80 per share next year. We believe Centene can turn Medicare around and generate positive earnings in the next few years. This could increase EPS by more than $1 per share and reduce the P/E ratio to just 8.5x. We think that’s good value for a business that generates healthy returns on capital and is capable of growing EPS at a low double-digit rate.”
Based in Cambridge, Massachusetts, Beam Therapeutics Inc. (NASDAQ:BEAM) is a biotechnology company focused on creating a new class of precision genetic medicines based on its proprietary base editing technology, to provide life-long cures to patients suffering from serious diseases.
On October 31, Beam Therapeutics Inc. (NASDAQ:BEAM) announced that Eli Lilly and Company has agreed to acquire certain rights under Beam Therapeutics Inc. (NASDAQ:BEAM) collaboration and license agreement with Verve Therapeutics, Inc., including the company’s opt-in rights to Verve’s base editing programs for cardiovascular disease.
Under the terms of the agreement, Beam Therapeutics Inc. (NASDAQ:BEAM) will receive an upfront $200 million payment as well as $50 million equity investment. The company is also eligible to receive up to $350 million in potential future development-stage payments.
Past year hasn’t been good for Beam Therapeutics Inc. (NASDAQ:BEAM) as its shares have lost nearly 40% of their value during the period. The stock has recently been making a recovery with nearly 19% of positive movement posted in the last 3 months. In addition, analysts still remain bullish about the stock with an average analyst price target of $49.67, which represents a potential upside of 78%.
