After back-to-back standout years, the S&P 500 is well-poised to achieve additional in 2025, banking on Donald Trump’s pro-growth initiatives, the Federal Reserve’s reasonable rate of interest insurance policies and a resilient U.S. economic system.
In 2024, the S&P 500 jumped greater than 20% for the second consecutive yr. With additional positive factors anticipated, traders ought to seize the bullish development by investing in sturdy S&P 500 momentum shares. Buyers ought to apply the funding technique of Richard Driehaus, higher often called the “purchase excessive and promote increased” idea.
To that finish, shares like NVIDIA Company NVDA, Brown & Brown, Inc. BRO and Chipotle Mexican Grill, Inc. CMG have been chosen because the momentum picks for 2025 utilizing the Driehaus technique.
A Detailed Look Into the Driehaus Technique
Relating to the technique, Driehaus as soon as mentioned: “I might a lot moderately put money into a inventory that’s rising in worth and take the danger that it might start to say no than put money into a inventory that’s already in decline and attempt to guess when it’ll flip round.” In step with this perception, the American Affiliation of Particular person Buyers (“AAII”) thought-about the proportion 50-day shifting common as one of many key standards earlier than making a portfolio following Driehaus’ philosophy.
It’s calculated by dividing the numerator (month-end worth minus 50-day shifting common of month-end worth) by the 50-day shifting common of the month-end worth. One other momentum indicator — constructive relative energy — has additionally been included on this technique. A constructive proportion 50-day shifting common signifies that the inventory is buying and selling at a worth increased than its 50-day shifting common degree, indicating an uptrend.
Furthermore, AAII discovered that Driehaus primarily focuses on sturdy earnings progress charges and spectacular earnings projections to choose potential outperformers. This technique, which was designed to offer higher returns over the long run, additionally prioritizes corporations with a powerful historical past of beating estimates.
Screening Parameters Utilizing Analysis Wizard
To make the technique extra worthwhile, we now have thought-about solely these shares with a Zacks Rank #1 (Robust Purchase) or 2 (Purchase) and a Momentum Rating of A or B. Our analysis exhibits that shares with a Model Rating of A or B, mixed with a Zacks Rank #1 or 2, provide the most effective upside potential.
• Zacks Rank lower than or equal to #2
Whether or not the market is nice or dangerous, shares with a Zacks Rank #1 or 2 have a confirmed historical past of outperformance. You possibly can see the complete list of today’s Zacks #1 Rank stocks here.
• Final 5-year common EPS progress charges above 2%
Robust EPS progress historical past ensures bettering enterprise
• Trailing 12-month EPS progress larger than 0 and trade median
Increased EPS progress in comparison with the trade common signifies superior earnings efficiency
• Final four-quarter common EPS shock larger than 5%
Strong EPS shock historical past signifies higher worth efficiency
• Optimistic proportion change in 50-day shifting common and relative energy over 4 weeks
Optimistic proportion change in 50-day shifting common and relative energy sign uptrend
• Momentum Rating equal to or lower than B
A positive momentum rating signifies that it’s best for making the most of the momentum with the very best likelihood of success.
These few parameters have narrowed the universe of over 7,743 shares to solely 47.
Listed here are the highest three of the 47 shares:
NVIDIA
NVIDIA affords graphics, computing and networking options. It has a Zacks Rank #2 and a Momentum Rating of A. The trailing four-quarter earnings shock for NVDA is 9.8%, on common (learn extra: NVIDIA is the Top 2025 Magnificent 7 Stock Pick – Find Out Why).
Brown & Brown
Brown & Brown markets and sells insurance coverage services and products. It has a Zacks Rank #2 and a Momentum Rating of B. The trailing four-quarter earnings shock for BRO is 6.9%, on common.
Chipotle Mexican Grill
Chipotle Mexican Grill operates quick-casual and contemporary Mexican meals restaurant chains. It has a Zacks Rank #2 and a Momentum Rating of B. The trailing four-quarter earnings shock for CMG is 9.8%, on common.
You will get the remainder of the shares on this checklist by signing up now to your 2-week free trial to the Analysis Wizard and begin utilizing this display in your personal buying and selling. Additional, you may also create your personal methods and check them first earlier than taking the funding plunge.
The Analysis Wizard is a superb place to start. It is simple to make use of. Every thing is in plain language. And it is very intuitive. Begin your Analysis Wizard trial immediately. And the subsequent time you learn an financial report, open up the Analysis Wizard, plug your finds in, and see what gems come out.
Click here to sign up for a free trial to the Research Wizard today.
Disclosure: Officers, administrators and/or workers of Zacks Funding Analysis could personal or have bought brief securities and/or maintain lengthy and/or brief positions in choices which might be talked about on this materials. An affiliated funding advisory agency could personal or have bought brief securities and/or maintain lengthy and/or brief positions in choices which might be talked about on this materials.
Disclosure: Efficiency info for Zacks’ portfolios and techniques can be found at: https://www.zacks.com/performance.
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Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
