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Wells Fargo Likes Momentum Plays Alphabet, Ford, Marriott, BofA

'Momentum stocks offer an attractive risk/reward into year-end,' Wells Fargo analysts said.
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Now is a good time for momentum stocks, such as Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report, Ford  (F) - Get Ford Motor Company Report, Marriott  (MAR) - Get Marriott International, Inc. Class A Report and Bank of America  (BAC) - Get Bank of America Corp Report, according to Wells Fargo.

“Contrary to the start of 2021, we now think high momentum stocks offer an attractive risk/reward into year-end,” Wells Fargo analysts, led by Christopher Harvey, wrote in a commentary.

“The Mo' style has taken on more cyclical characteristics, and valuations have become more attractive. Importantly for short-term tactical traders, Mo' is working in our view," they wrote.

“The iShares MSCI USA Momentum Factor ETF  (MTUM) - Get iShares MSCI USA Momentum Factor ETF Report is outpacing the market by about 4 percentage points over the last three months.”

Indeed, MTUM has climbed 9% over that period, compared to 5% for the S&P 500.

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Wells Fargo compiled a list of stocks with a combination of high 12-month and low one-month momentum that the bank rates overweight. 

In addition to the four above, they include Bath & Body Works  (BBWI) - Get Bath & Body Works, Inc. Report, Expedia Group  (EXPE) - Get Expedia Group, Inc. Report, MGM Resorts  (MGM) - Get MGM Resorts International Report, Estee Lauder  (EL) - Get Estee Lauder Companies Inc. Class A Report, Sysco  (SYY) - Get Sysco Corporation Report, Devon Energy  (DVN) - Get Devon Energy Corporation Report, Capital One  (COF) - Get Capital One Financial Corporation Report and Goldman Sachs  (GS) - Get Goldman Sachs Group, Inc. Report.

The list also highlights  PNC Financial Services  (PNC) - Get PNC Financial Services Group, Inc. Report, Agilent Technologies  (A) - Get Agilent Technologies, Inc. Report, Johnson Controls  (JCI) - Get Johnson Controls International plc Report, Applied Materials  (AMAT) - Get Applied Materials, Inc. Report, Hewlett Packard Enterprise  (HPE) - Get Hewlett Packard Enterprise Co. Report, Intuit INTU, Kimco Realty  (KIM) - Get Kimco Realty Corporation Report, and Exelon  (EXC) - Get Exelon Corporation Report.

Friday’s laggards Apple AAPL and Amazon AMZN don’t make the list. 

As for Alphabet, several analysts raised their price targets for the technology giant Wednesday, after it beat Wall Street's third-quarter earnings expectations.

Alphabet said revenue rose by 41% to $65.12 billion, exceeding an estimate of $63.34 billion predicted by analysts surveyed by Refinitiv.