36 Momentum Stocks to Consider Now

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I update the following portfolio/screen on a monthly basis on Scott's Investments. February's list of 40 stocks is here and the top 10 rated stocks returned an average of 3.47% for the top 10 stocks on the list versus -1.14% for SPY. The entire list of 40 stocks last month returned an average of 2.50%, led by First Cash Financial Services (FCFS) at 20.89%.

The screen looks for the following:

earnings growers still reasonably priced as judged by the PEG ratio
low debt
a history of high return on equity and investment, and
price momentum as gauged by the percentage the stock is trading to its 250 day high.
The stocks are then ranked based on fundamental factors as compiled by stockscreen123.

36 stocks qualified for this month's list. Just as in last month, this tells us individual stock momentum still exists in the market and the fundamental factors on the list are easy to find among the high momentum stocks.

This strategy of screening stocks has produced solid returns since this summer. For example, August's list returned 16.17% versus 7.87% for SPY and July's top 5 stocks returned over 19%.

The rational for this screen is based on backtests showing stocks with low PEG ratios, debt, and high returns on equity and price momentum have produced good historical returns. The screen has tested well historically in bullish periods and has suffered during significant market drawdowns. Strategies an investor could use to avoid major drawdowns would be to either abandon this type of strategy entirely when the SP 500 or another major index is below a long term moving average, or hedge positions using one of the methods I profiled here.

Two possible tools an investor could use to conduct this screen on his/her own are stockscreen123 or Finviz. This screen was conducted using stockscreen123. For the full list of stocks and real-time results, please see the right hand side of Scott's Investments.

Ticker	Name	Trend	Rank	PEG LT	DbtTot 2 EqQ
ASNA	Ascena Retail Group Inc	Here	99.8	0.98	0.02
AIT	Applied Industrial Technologi	Here	99.46	0.89	0
USPH	U.S. Physical Therapy, Inc.	Here	99.24	0.97	0.06
LRCX	Lam Research Corporation	Here	99.06	0.94	0.01
VSEA	Varian Semiconductor	Here	94.11	0.78	0
NSP	Insperity Inc	Here	91.92	0.68	0
DTV	DIRECTV	Here	91.38	0.59	0
SHOO	Steven Madden, Ltd.	Here	90.99	0.83	0
LECO	Lincoln Electric Holdings, In	Here	90.51	0.99	0.09
AAPL	Apple Inc.	Here	90.49	0.78	0
EZPW	EZCORP, Inc.	Here	89.25	0.74	0.04
FCFS	First Cash Financial Services	Here	88.94	0.79	0.01
CTCM	CTC Media, Inc.	Here	88.5	0.21	0
AVAV	AeroVironment, Inc.	Here	87.6	0.84	0
MA	MasterCard Incorporated	Here	87.58	0.75	0
NTES	NetEase.com, Inc. (ADR)	Here	86.61	0.66	0
ANF	Abercrombie & Fitch Co.	Here	84.6	0.73	0.04
DECK	Deckers Outdoor Corporation	Here	84.18	0.64	0
AIXG	Aixtron AG (ADR)	Here	83.06	0.26	0
FOSL	Fossil, Inc.	Here	83.04	0.84	0.01
PPDI	Pharmaceutical Product Develo	Here	82.01	0.89	0
SAM	The Boston Beer Company, Inc.	Here	80.22	0.92	0
IPGP	IPG Photonics Corporation	Here	80.04	0.96	0.08
NVEC	NVE Corporation	Here	79.16	0.8	0
BIDU	Baidu.com, Inc. (ADR)	Here	76.44	0.61	0
CRR	CARBO Ceramics Inc.	Here	75.52	0.98	0
GOOG	Google Inc.	Here	74.13	0.77	0.07
ALGN	Align Technology, Inc.	Here	73.09	0.81	0
SEIC	SEI Investments Company	Here	71.3	0.98	0.09
GSOL	Global Sources Ltd. (Bermuda)	Here	70.17	0.47	0
GA	Giant Interactive Group Inc (	Here	66.77	0.94	0
BWLD	Buffalo Wild Wings	Here	63.12	0.85	0.07
SCSS	Select Comfort Corp.	Here	60.98	0.92	0
MASI	Masimo Corporation	Here	58.83	0.98	0
NSR	Neustar, Inc	Here	56.34	1	0.02
ESV	ENSCO PLC	Here	47.22	0.79	0.04