Nasdaq's Rally to Continue in 2H20: 5 Momentum Stocks to Buy

The Nasdaq composite has been outperforming the Dow Jones Industrial and the S&P 500 so far this year, driven by momentum in technology stocks that have shown great resilience amid the coronavirus pandemic.

The tech-laden index is up 10.05% year to date against the Dow Jones Industrial’s decline of 10.31% and the S&P 500’s fall of 5.5%.

Markedly, since the Mar 23 lows, Nasdaq is up almost 49%, better than the Dow Jones Industrial’s gain of 40.5% and the S&P 500’s return of 39.3%.

Per Dow Jones data, cited by MarketWatch, the Nasdaq is enjoying the best spell against Dow Jones Industrial since 1983. Moreover, this is the first-time since 1977 that the Nasdaq is gaining in the middle of the year, while both the Dow Jones Industrial and S&P 500 are moving down.

Nasdaq Rally to Continue in 2H20

The momentum in Nasdaq is expected to continue, primarily fueled by changing consumer preference and behavior. Stay-at-home is now the new normal as we are learning to live with the virus for a significant stretch. This is expected to boost web-based services like e-commerce, contactless payment and delivery.

Moreover, the work-from-home and online learning wave is anticipated to keep demand for remote-working tech, cloud services and cybersecurity solutions high.

Additionally, rapid adoption of cloud computing along with the infusion of AI and machine learning as well as the accelerated deployment of 5G technology, autonomous vehicles, AR/VR and wearables are major positives.

Further, demand for coronavirus testing solutions is expected to remain high until the availability of an effective vaccine.

Nasdaq Momentum to Boost Portfolio

Momentum investing calls for continued appraisal of stocks, which ensures that an investor does not pick a beaten-down name or overlook a thriving one. Momentum investors buy high on the anticipation that the stock will only ascend in the short to intermediate term.

Here we pick five Nasdaq-listed momentum stocks that are up in the past week as well as past month.

Apart from strong growth potential and robust earnings estimate revisions, each of these stocks has a favorable combination of a Momentum Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

These stocks also have a market cap of more than $1 billion and have outperformed the S&P 500 composite on a year-to-date basis.

Year-to-Date Performance

Everbridge EVBG is riding on strong demand for critical event management (CEM) solutions amid the coronavirus outbreak. This Zacks Rank #1 company has rolled out the COVID-19 “Return to Work” software solution that enables organizations to manage the complexity of diverse city, state, and country guidelines and mandates as it is prepares to bring back employees to the workplace. The solution also ensures compliance with a full audit trail.

Everbridge has a Momentum Score of B. The Zacks Consensus Estimate for the company’s 2020 loss stands at 18 cents per share, having narrowed from a loss of 76 cents in the past 60 days.

Shares of this $4.84-billion company have been up 3.72% in the past week and 3.06% in the past month.

Baozun BZUN is benefiting from solid demand for e-commerce services amid the pandemic. This $2.44-billion company’s effort to expand brand partners in different categories, including FMCG, is driving user growth. Moreover, economic recovery in China is expected to boost top-line growth in the near term. Baozun expects revenues to grow in the 20-23% range for second-quarter 2020.

Baozun currently flaunts a Zacks Rank of 1 and a Momentum Score of B. The Zacks Consensus Estimate for its 2020 earnings is pegged at $1.13 per share, having been raised 6.6% in the past 60 days.

The stock has gained 3.61% in the past week and 50.17% in the past month.

Zoom Video Communications ZM is riding on the coronavirus-induced work-from-home and online-learning trend. Moreover, this $72.44-billion company’s efforts to eliminate the security and privacy loopholes like “zoombombing” are expected to help maintain its existing enterprise user base as well as attract more customers.

Zoom Video currently flaunts a Zacks Rank of 1 and a Momentum Score of B. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $1.18 per share, having been raised 174.4% in the past 60 days.

Shares have gained 6.3% in the past week and 57.02% in the past month.

Mersana Therapeutics MRSN focuses on the development of antibody drug conjugates (ADC) for cancer patients. In May, the company provided encouraging interim data from an early-stage study evaluating its XMT-1536, in ovarian cancer patients and non-small cell lung (NSCLC) adenocarcinoma.

Mersana carries a Momentum Score of A and has a market cap of $1.50 billion. The consensus mark for 2020 is pegged at a loss of $1.23 per share, having been narrowed from a loss of $1.48 in the past 60 days.

The stock has gained 6.83% past week and 13.66% in the past month.

Okta OKTA is benefiting from robust demand for identity management services globally, triggered by the work-from-home wave. Notably, Okta Identity Cloud platform offers a suite of applications that manage and secure identities. The company has a market cap of $25.36 billion.

Okta currently carries a Zacks Rank #2 and a Momentum Score of B. The Zacks Consensus Estimate for fiscal 2021 is pegged at a loss of 19 cents per share, having been narrowed from a loss of 35 cents in the past 60 days.

Shares have gained 3.66% in the past week and 10.64% in the past month.


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Baozun Inc. (BZUN) : Free Stock Analysis Report
 
Everbridge, Inc. (EVBG) : Free Stock Analysis Report
 
Okta, Inc. (OKTA) : Free Stock Analysis Report
 
Mersana Therapeutics, Inc. (MRSN) : Free Stock Analysis Report
 
Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
 
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