Stocks to buy

Some of the market’s top momentum stocks appear to be on the cusp of a breakout. Whether it is due to strong earnings, new products, or improving sentiment, some of these stocks have a buzz about them. Better, many can reasonably be expected to move higher over the coming year. Plus, if economic conditions improve and we manage to avoid a deep and prolonged recession, we may enter a full-fledged bull market, which could boost these top momentum stocks.

AAPL Apple $180.57
LULU Lululemon $354.95
AMZN Amazon $124.25
GS Goldman Sachs $335.47
WMT Walmart $152.17
FDX FedEx $225.01
DKS Dick’s Sporting Goods $134.97

Top Momentum Stocks: Apple (AAPL)

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Apple (NASDAQ:AAPL) recently hit an all-time high after the company introduced its long-awaited augmented reality headset called the “Vision Pro.” It comes with a momentous price tag of $3,499, which raised a few eyebrows. But for the money, users get a mixed-reality headset that allows them to scroll through apps using only their eyes and watch movies (including in 3D), view photographs, and play video games.

In addition, the Vision Pro can also be used for work through videoconference apps. Plus, Apple plans to have the headset for sale in early 2024, which could be another strong catalyst. The company also announced other new products at its June developer conference, including a 15-inch MacBook Air laptop, iOS 17 for the iPhone, and a new FaceTime feature for Apple TV.

Lululemon (LULU)

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Athletic apparel company Lululemon (NASDAQ:LULU) is riding high following its most recent earnings report. The retailer saw its stock jump 15% higher after it announced strong fiscal first-quarter earnings, which beat Wall Street forecasts. In fact, Lululemon reported that its revenue rose 24% to $2 billion, which beat analyst expectations for $1.93 billion. Net income came in at $290 million compared to $190 million a year earlier. Even better, the company said revenue in China grew 79% in fiscal Q1 from a year earlier. Perhaps most impressive, the retailer lifted its forward guidance, saying it now expects full-year revenue of $9.44 billion to $9.51 billion, up from a previous estimate of $9.31 billion to $9.41 billion. The company plans to open 50 new stores this year, most of them in China. LULU stock is now up 10% on the year and momentum seems to be building.

Amazon (AMZN)

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Amazon (NASDAQ:AMZN) could have a big catalyst on its hands. That is, if rumors are true that the e-commerce giant is planning to offer free nationwide mobile phone service to its Prime members in the U.S. Multiple media reports state that Amazon is negotiating with major wireless internet providers, including Verizon (NYSE:VZ) and Dish Networks (NASDAQ:DISH), to get the lowest wholesale internet prices, which it plans to pass onto consumers and drive growth in its Prime memberships.

Amazon is reportedly planning to offer Prime members unlimited wireless internet plans for as little as $10 a month, or possibly for free, to strengthen loyalty among its customers and drive membership sales. Prime members currently pay $139 a year for free delivery, video streaming, and access to more than 100 million songs. About 167 million Americans have a Prime membership. However, that level has flatlined after the company increased the price from $119. AMZN stock is flat (down 0.62%) over the past 12 months and looks ready to run.

Goldman Sachs (GS)

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IPOs and M&A deals may be in the doldrums for now. However, that could soon change with the upcoming IPO of British microchip maker Arm, which could be 2023’s biggest market debut. In fact, there’s word is could be valued at as much as $10 billion. Not only could that deal revive the IPO market, but also firms such as Goldman Sachs (NYSE:GS), which has seen its share price slide 3% this year due to a lack of action on Wall Street.

While it waits for a turnaround in the deals market, Goldman Sachs has been working to become a leaner organization. The investment bank just announced new staff cuts in what is its third round of layoffs since September 2022. The company said it expects to let 250 people go in the latest workforce reduction. This follows 3,200 staff cuts made in January of this year. Other investment banks have also cut staff, with Morgan Stanley (NYSE:MS) letting 3,000 people go earlier this year. Goldman Sachs reported a 16% decline in Q1 trading and advisory revenue as deals on Wall Street remain in a slump. But should that downward trend reverse higher, GS stock can be expected to skyrocket.

Walmart (WMT)

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Retail juggernaut Walmart (NYSE:WMT) has a few things working in its favor. The company just issued strong Q1 earnings, reporting that its sales rose nearly 8% as its grocery business offset weak demand for clothing and electronics. EPS came in at $1.47 versus the $1.32 that was forecast. Revenue in Q1 totaled $152.30 billion, which was ahead of forecasts for $148.76 billion. In addition, Walmart reported that its online or e-commerce sales grew 27% year-over-year during Q1.

Walmart also raised its forward guidance, saying it now anticipates that its net sales will increase by 3.5% for all of this year and that its EPS for 2023 will come in at $6.10 to $6.20. While the company noted that consumers are buying fewer big-ticket items such as TV sets, it said that its grocery sales are going gangbusters as people seek out cheaper prices with inflation remaining high. WMT stock has gained 4% year to date but could break out, especially if the economy falls into a recession in the year’s second half.

FedEx (FDX)

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We haven’t heard a lot from FedEx (NYSE:FDX) lately, but that could change with the shipping and logistics company’s next earnings report. In the meantime, analysts have been upgrading FDX stock in the lead-up to its Q1 print scheduled for June 20. Atlantic Equities, for example, just initiated coverage of FedEx stock with an “overweight” (buy) rating and a $265 price target, which is nearly 20% higher than where the shares are currently trading. Over the last 12 months, FDX stock has gained only a slight 3%.

Better, analysts are growing increasingly bullish on FDX stock due to expectations that the company has gotten its house in order with an aggressive cost-cutting plan. Also, FedEx’s last quarterly results, delivered in March, were better than Wall Street expected and showed the company is making progress. FedEx raised its full-year guidance in March, saying it expects EPS of  $14.60 and $15.20 per share.

Dick’s Sporting Goods (DKS)

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Shares of sports equipment retailer Dick’s Sporting Goods (NYSE:DKS) dipped at the end of May after several other retailers, notably Foot Locker (NYSE:FL), reported subpar earnings. DKS stock fell 10% in only a few days, largely in sympathy with Foot Locker and others. However, the share price has since recovered all of that loss and looks poised to test new highs over the coming 12 months. The company has proven to be remarkably resilient in the face of inflation and rising interest rates, positioning it as a best-in-class retailer.

Earlier this year, Dick’s Sporting Goods more than doubled its quarterly dividend after crushing its earnings. The company raised its quarterly dividend to $1, which is an increase of 105% from the 48.75 cents previously. The company has continued to report strong earnings as its specialty focus on sports equipment, strong brand, and market share enable it to weather the current inflationary and high-interest rate environment. As the economy and consumer spending improve, DKS stock should strengthen further.

On the date of publication, Joel Baglole held long positions in AAPL and MS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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