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5 Momentum Stocks to Buy for January After a Tepid December
U.S. stock markets witnessed an impressive rally in 2024 after an astonishing bull run in 2023. Following the 24.2% ascent in 2023, the S&P 500 rallied 23.3% last year. The benchmark jumped 53% in the last two years recording its best performance since the nearly 66% rally in 1997-98. The broad-market index posted 57 all-time highs in 2024. The Dow and the Nasdaq Composite rallied 12.9% and 28.6%, respectively, last year.
However, Wall Street failed to maintain its momentum last month and ended mostly in negative territory. In December, the Dow plummeted 5.3%, reflecting its worst monthly performance since September 2022. The S&P 500 tumbled 2.5%, marking its worst monthly performance since April 2024. The tech-laden Nasdaq Composite was up a mere 0.5%.
However, a handful of stocks are expected to maintain their momentum in January too. Five such stocks with a favorable Zacks Rank are: Doximity Inc. DOCS, Southwest Airlines Co. LUV, Alaska Air Group Inc. ALK, Dropbox Inc. DBX and Paramount Global PARAA.
Top 5 Momentum Picks for January
These five stocks have strong momentum for January and have seen positive earnings estimate revisions in the last 60 days. Each of the stocks sports a Zacks Rank #1 (Strong Buy) at present and has a Zacks Momentum Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past six months.
Zacks Investment Research
Image Source: Zacks Investment Research
Doximity Inc.
Doximity provides digital platform for medical professionals. DOCS’ network members include physicians across all specialties and practice areas. DOCS provides its verified clinical membership with digital tools built for medicine, enabling them to collaborate with colleagues, stay up to date with the latest medical news and research, manage their careers and conduct virtual patient visits.
Doximity has an expected revenue and earnings growth rate of 13.4% and 14.5%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 10% in the last 60 days.
Southwest Airlines Co.
Southwest Airlines has been benefiting from improvement in air travel demand. Given that travel demand has remained healthy, LUV anticipates fourth-quarter 2024 unit revenues to increase 5.5-7% on a year-over-year basis. As part of its growth strategy, LUV is focused on its cost-cutting initiatives and fleet-modernization techniques.
LUV's liquidity position is also encouraging. A solid balance sheet allows Southwest Airlines to reward its shareholders through share buybacks and dividend payments. We believe that the positives surrounding the LUV stock outweigh the concerns of escalating labor costs. We, therefore, suggest investors to add the LUV stock to their portfolio for healthy returns.
Southwest Airlines has an expected revenue and earnings growth rate of 5.8% and 107.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.5% in the last 30 days.
Alaska Air Group Inc.
Alaska Air Group has been benefiting from an improvement in air travel demand. With people taking to the skies again following the end of the pandemic, total revenues at ALK increased 4% in the first nine months of 2024, driven by a 4% uptick in passenger revenues.
ALK’s fleet modernization initiatives look encouraging. The inclusion of modern planes in its fleet and the retirement of the old ones are in line with ALK’s environmentally friendly approach. On a shareholder-friendly note, management resumed share buybacks in 2023. Low fuel costs are also aiding ALK’s bottom line. The completion of the buyout of Hawaiian Holdings is another positive.
Alaska Air Group has an expected revenue and earnings growth rate of 24.3% and 34.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.7% in the last 30 days.
Dropbox Inc.
Dropbox is benefiting from an expanding user base and strong average revenue per paying user (ARPU) growth. DBX exited third-quarter 2024 with 18.24 million paying users while ARPU was $139.05 compared with $138.71 in the year-ago quarter. The upside was driven by the Teams pricing increase.
DBX is a leader in the content sharing and collaboration applications category. Dropbox currently supports more than 700 million registered users through its FSS plans and has better market share than Apple and Box. DBX has a strong balance sheet and generates strong free cash flow.
Dropbox has an expected revenue and earnings growth rate of 0.2% and 9.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 19.7% in the last 60 days.
Paramount Global
Paramount Global operates as a media, streaming, and entertainment company worldwide. PARAA operates through TV Media, Direct-to-Consumer, and Filmed Entertainment segments. PARAA’s portfolio of consumer brands includes CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, Paramount, Pluto TV and Simon & Schuster, among others.
Paramount Global has an expected earnings growth rate of 54.7% for the current year. Although its revenue growth rate is negative for the current year, it is 0.2% for next year. The Zacks Consensus Estimate for current-year earnings has improved more than 100% in the last 60 days.
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