3 Momentum Stocks to Snag for a Strong Q4

Wall Street’s momentum is undeniably bullish as the fourth quarter rolls on, with the S&P 500 Index SPX and Dow Jones Industrial Average $DOWI setting new record highs. With earnings season off to a robust start and the Federal Reserve steering toward a soft landing, analysts at Jefferies recommend betting on the momentum trade to stay strong into year-end.

Momentum investing banks on the idea that rising stocks tend to keep climbing while falling ones continue to drop. In a recent note, Jefferies U.S. small-mid cap strategist Steven DeSanctis said, “momentum has been red-hot and tends to keep its momentum heading into the last few months of a year.” Among the analyst’s top picks, here are three names that could be worth buying now to capitalize on continued upside.

Momentum Stock #1: Howmet Aerospace Inc. (HWM)

Pittsburgh-based Howmet Aerospace Inc. HWM is an industrial supplier for the aerospace and transport industries. Valued at $43 billion by market cap, this company engineers precision components for jet engines and titanium structures, keeping aircraft light, fast, and fuel-efficient, while also providing forged aluminum wheels for heavy trucks. Shares of Howmet have surged nearly 138% over the past 52 weeks and 95% on a YTD basis, hitting a fresh high of $106.76. On Sept. 25, Howmet declared a quarterly dividend of $0.08 per share, payable to its shareholders on Nov. 25, offering an annualized dividend of $0.32 per share that translates to a yield of 0.30%.

Shares of Howmet rose over 13% on July 30 after reporting stronger-than-forecast fiscal Q2 earnings results. Total revenue rose 14% year over year to $1.9 billion, fueled by 27% growth in the commercial aerospace market. Adjusted EPS climbed 52% annually to $0.67. Howmet exited Q2 with cash and cash equivalents of $752 million, up from $610 million at the end of December 2023. Long-term debt amounted to $2.9 billion, down from $3.5 billion at the end of fiscal Q4 2023. Management raised its full-year 2024 guidance for revenue between $7.40 billion and $7.48 billion, and adjusted EPS between $2.53 and $2.57. Q3 earnings from Howmet are expected on Wednesday, Nov. 6. HWM stock has a consensus “Strong Buy” rating overall, with 18 out of 21 analysts recommending a “Strong Buy.”

Momentum Stock #2: Onto Innovation Inc. (ONTO)

Massachusetts-based Onto Innovation Inc. ONTO is involved in advanced semiconductor packaging. Onto’s advanced technology suite—including wafer quality, 3D metrology, and lithography solutions—plays a crucial role in enhancing yield and performance in semiconductor design. Valued at around $10.3 billion, shares of this chip-manufacturing equipment company have rallied 66.7% over the past 52 weeks and are up 37% in 2024.

Shares of Onto leaped over 8% on Aug. 9 following the company’s stronger-than-expected Q2 earnings report, where revenue grew 27% year-over-year to $242.3 million, aided by expansions in high-performance computing and AI-driven high-bandwidth memory (HBM) projects. Specialty and advanced packaging revenues set a record at $164 million, backed by soaring demand from AI packaging clients. Onto’s adjusted EPS of $1.32 jumped 67.1% annually. Upcoming Q3 earnings are anticipated on Thursday, Oct. 31. Management forecasts revenue growth between $245 million and $255 million, while adjusted EPS is expected between $1.25 and $1.35. Analysts project Onto’s profit will soar 38.9% year over year to $5.18 per share in fiscal 2024, and grow another 23.8% to $6.41 per share in fiscal 2025. ONTO stock holds a consensus “Strong Buy” rating, with six out of seven analysts recommending a “Strong Buy.”

Momentum Stock #3: US Foods Holding Corp. (USFD)

US Foods Holding Corp. USFD is a key player in the U.S. food service industry. Based in Rosemont, Illinois, it supplies restaurants, hospitals, hotels, and more with a variety of goods. With a market capitalization of $15.3 billion, USFD stock has rallied 66.6% over the past 52 weeks and more than 37% in 2024.

The stock reached a new all-time high of $63.13 on Oct. 15. On Aug. 8, US Foods reported a mixed fiscal Q2 earnings report, outperforming revenue estimates but falling short on earnings. Revenue climbed 7.7% year over year to $9.7 billion, driven by total case volume growth and food cost inflation. Adjusted EPS increased by 17.2%, reaching $0.93, just shy of the consensus. US Foods also marked its 13th consecutive quarter of market share gains in independent restaurant case volume, rising 5.7%. The company is set to report its fiscal Q3 earnings on Nov. 7, with management guiding for net sales between $37.5 billion and $38.5 billion, and adjusted EPS between $3.00 and $3.20. Profit projections suggest an 18.4% year-over-year increase to $2.90 per share in fiscal 2024, followed by a 20.3% increase to $3.49 in fiscal 2025. USFD holds a consensus “Strong Buy” rating, with 11 of 14 analysts recommending a “Strong Buy.”

As we approach year-end, the landscape for momentum stocks remains promising, driven by strong earnings and strategic market positioning. Investors looking for potential gains should consider these stocks as solid options for Q4 and beyond.