This is the first of a recurring monthly feature in which we will look at and analyse the top momentum stocks in the NASDAQ100. The NASDAQ100 is one of the best performing indices of the last decade, including the Magnificent Seven.
1. Understanding Momentum Qualification
Momentum investing focuses on identifying stocks that are on a consistent upward trajectory. For this article, we analyze stocks in the NASDAQ 100 with the highest price increases over three key periods:
- Last 12 months: Long-term momentum performance
- Last 6 months: Medium-term trend strength
- Last 3 months: Recent surges indicating short-term momentum
This multi-layered analysis ensures a balanced view of sustained and accelerating growth, narrowing down the top candidates for the month.
2. The Idea Behind Momentum Investing
Momentum investing is grounded in a simple yet powerful principle: stocks that have performed well in the past are more likely to continue performing well in the near future. This strategy capitalizes on market psychology, where optimism and bullish sentiment drive prices higher.
By understanding momentum, retail investors can:
- Ride the upward trend until signs of reversal
- Reduce exposure to stagnant or declining assets
- Enhance portfolio returns with strategic timing
3. January Top Momentum Recap
If you have just joined us this month or would like to see the top momentum stocks again, here is the article from the beginning of January.
Let’s take a look at the performance over the last 30 days. I don’t know about you, but the month got off to an unusually turbulent start. With the inauguration of Donald Trump for his second term in office and all the rumours and speculation that went with it, but also the concrete decrees that have already been passed in his first days in office.
Let’s take a quick look at last month’s top five and see if investing on momentum in the first 30 days of the year would have produced a positive return or not.
Basically, January started with losses, then turned upwards towards the end of the month, only to lose a little momentum in the last few metres, also in view of the lack of interest rate cuts by the Federal Reserve (link!).
1. Axon Enterprise, Inc. (AXON)
Axon’s momentum appears to be unbroken and has continued into 2025. In its first month on the Nasdaq 100, the stock gained a further +8%, making it one of the clear winners of the first month of the new year.
2. Booking Holdings Inc. (BKNG)
The momentum in bookings seems to have slowed for the time being and we have recorded a 5% drop in prices since the beginning of the year.
3. Netflix, Inc. (NFLX)
January was also dominated by Q4 releases, which also helped Netflix’s momentum, which remained steady and beat analyst expectations, allowing the stock to close the first part of the year up 9%.
4. T-Mobile US, Inc. (TMUS)
T-Mobile US was also able to surprise investors and analysts by announcing revenue and earnings growth above expectations, leading to a 6% gain in the stock price and another momentum winner in January.
5. Fortinet, Inc. (FTNT)
Fortinet’s Q4 results have yet to be released (the cut-off date is 6 February), but the stock has continued to rally, up 6%, despite the lack of clarity surrounding the financial statements.
All in all, January was a strong start to the year and, with one exception, the momentum of the stocks selected here has continued into the new year. On average, returns of 4.5% to 5% would have been possible in just one month.
In my monthly momentum updates, we will find out whether this really strong start to the year will continue over the coming months.
Please note that there will be setbacks, not every month will be like this and this is only an example and a very simplified strategy that does not take into account transaction fees, taxes, slippage etc. As always, I just want to give you an approach that you can use to further refine your investment strategies.
4. The Top Momentum Stocks in Febuary 2025
1. Axon Enterprise, Inc. (AXON)
After a brilliant start in January, the share is maintaining its strong momentum.
- Sector: Technology
- 12-month price increase: +153%
- 6-month price increase: +123%
- 3-month price increase: +53%
- 1-month price increase: +8%
- Company profile: Axon develops public safety technologies, including TASER devices and cloud-based software for law enforcement agencies.
- Key financials: Axon earned 1.94B in revenue over the last 12 months with quarterly revenue growth of 31.70% and a 9.30% in earnings.
- Latest news: Newcomer to the NASDAQ 100, Axon joined the index on December 23, 2024, due to its growth in the past month. Latest financial updates surpassed analyst
- expectations.
2. Broadcom Inc. (AVGO)
First newcomer to this month’s list is Broadcom one of the beneficiaries of the AI hype of the last two years. However, the share price has also been affected recently by the publication of DeepSeek (the latest AI model from China to compete with the US LLM from OpenAI, Meta, Google and Apple), although to a much lesser extent than Nvidia (NVDA), for example.
- Sector: Semiconductors
- 12-month price increase: +83%
- 6-month price increase: +54%
- 3-month price increase: +31%
- 1-month price increase: -5%
- Company profile: Broadcom is a global technology leader in designing, developing, and supplying semiconductor and infrastructure software solutions. It serves diverse industries, including data centers, wireless communications, and industrial automation.
- Key financials: AVGO has demonstrated impressive returns driven by strong semiconductor demand with revenues of $51bn ttm and double digit growth in revenues and earnings over the last five and ten years (e.g. 23.7% 10yr revenue CAGR & 17.35% 5yr EBITDA CAGR). Free cash flow is growing steadily with a free cash flow margin close to 50%. The gross profit margin reaches an impressive 63%, although the return on capital employed has averaged 12% over the last 10 years, it is currently only around 6% based on the latest data. All in all, Broadcom is a financially strong player on the semiconductor market.
- Latest News: Broadcom completed its acquisition of VMware in January 2025, enhancing its enterprise software offerings. The deal, worth approximately $61 billion, positions Broadcom as a leader in cloud infrastructure.
3. Netflix, Inc. (NFLX)
- Sector: Communication Services
- 12-month price increase: +85%
- 6-month price increase: +33%
- 3-month price increase: +21%
- 1-month price increase: +9%
- Company profile: Netflix is a global leader in streaming entertainment with a focus on original content.
- Key financials: Netflix was able to achieve a quarterly revenue growth of 15% (37.59B ttm) despite the increased fragmentation of the streaming market and a stunning 40.90% earnings growth over the last quarters. Netflix continues to impress with its figures and earnings per share currently stand at almost $20, while the return on invested capital remains at a very high level of 20%.
- Latest News: Starting January 6, 2025, Netflix became the exclusive streaming home for WWE’s “Monday Night Raw” in a landmark 10-year deal valued at over $5 billion. This agreement also includes major events like WrestleMania and SummerSlam, significantly expanding Netflix’s live entertainment offerings. Sports Streaming Expansion: In December 2024, Netflix secured exclusive U.S. broadcasting rights for the 2027 and 2031 FIFA Women’s World Cup tournaments, marking a significant move into live sports streaming.
4. Amazon.com, Inc. (AMZN)
- Sector: Consumer Discretionary
- 12-month price increase: +38%
- 6-month price increase: +41%
- 3-month price increase: +20%
- 1-month price increase: +6%
- Company profile: Amazon is a multinational technology company focusing on e-commerce, cloud computing, digital streaming, and artificial intelligence.
- Key financials: Amazon publishes its latest figures on the sixth of February. Otherwise, it looks as if Amazon is continuing on its growth path and can build on the high growth rates of recent years (e.g. 25% 5yr EBITDA CAGR). With a simultaneous reduction in the cost revenue ratio, from approx. 70% in 2014 to 53% in 2023. Sales in Q3 2024 totalled $158B, an increase of 11% on the previous year.
- Latest News: Drone Deliveries in the UK: Amazon is set to launch drone deliveries in the UK for the first time, following successful operations in the US since 2022. Initial flights will commence from a fulfillment center in Darlington, North East England. The drones are capable of transporting shoebox-sized packages within 30 minutes, with a maximum weight limit of 2.2 kg. UPS has announced that it will cut its deliveries for Amazon by more than half, and the rise in the share price despite this news shows investor confidence in Amazon’s robust logistics network. These developments highlight Amazon’s ongoing efforts to innovate in logistics and expand its delivery capabilities.
5. Fortinet, Inc. (FTNT)
- Sector: Technology
- 12-month price increase: +63%
- 6-month price increase: +58%
- 3-month price increase: +18%
- 1-month price increase: +6%
- Company profile: Fortinet specializes in cybersecurity solutions, including firewalls and network security systems.
- Key financials: In this month’s list it is one of the smaller companies in terms of revenue with 1.73 billion and a growth of 13% over the last quarter, Fortinet was able to grow its earnings by more than 67% over the same period, one of the fastest growing companies in terms of earnings.
- Latest News: Fortinet has been highlighted as a leading stock near buy points, indicating strong market confidence in its business model and growth prospects.The company provided three- to five-year financial targets, with expectations that billings and revenue will grow at a 12% compound annual growth rate, slightly above analyst predictions.
5. How to Use This Strategy to Your Advantage
Momentum investing can be a valuable tool for retail investors. Here’s how you can incorporate it into your portfolio strategy:
- Diversify Momentum Picks: Avoid putting all your funds into a single stock. Diversify across sectors to mitigate risk.
- Monitor Regularly: Keep track of performance and exit positions if momentum shows signs of fading.
- Combine with Fundamentals: Use momentum as a filter but validate choices with strong financials and a solid growth outlook.
- Stay Disciplined: Set stop-loss limits to protect against unexpected downturns.
- Short Term: This approach pursues a more short-term investment strategy with a holding period of one to three months, for example.
Final Thoughts
Momentum investing in the NASDAQ 100 offers exciting opportunities for retail investors. By focusing on stocks with a proven track record of growth, you can align your portfolio with market leaders. Integrating portfolio optimization through the efficient frontier can enhance your returns while managing risk. Keep an eye out for our next month’s Top 5 picks and continue to leverage momentum to achieve your financial goals.
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Disclaimer
This article is an example of how to use different approaches to invest in the stock market. It is not financial advice and is intended solely for educational purposes.
