A momentum strategy is a favorite approach for many investors out there.
Who doesn’t like the idea of buying a surging stock or ETF and riding it to even bigger gains?
However, in uncertain market environments, like we find ourselves in today, you need to consider safety too. Equities have been extremely volatile as of late and many times momentum can be going against you.
That is why investors who like the momentum style of investing may want to look to securities that are seeing positive price activity, but can provide investors with a margin of safety too. This approach may be the way to go for momentum investors in this uncertain time, and especially if markets remain shaky and prone to volatile negative moves in the weeks ahead.
How to Invest
Investors have a few ways to play this trend at their disposal. One way is by looking at securities that are in safer sectors like utilities or consumer staples. This approach will find safer stocks in general, and securities that aren’t as prone to big negative moves when the market is sliding lower.
Another technique is to look at stocks that have great momentum scores, but are still trading at great values too. This can help investors to find the best-positioned stocks to surge that still have compelling valuations which can give investors a nice margin of safety if broad markets turn south again.
No matter which approach suits you, we have a few picks below which fit the bill. There are two ETFs and two stocks which either have strong momentum prospects, or utilize momentum-based strategies when selecting securities for inclusion in their benchmark. Take a look at this list for a few investments that should appease even the most discerning momentum investor out there for today’s market:
Bob Evans Farms (BOBE – Snapshot Report)
BOBE owns and operates a series of full-service restaurants around the United States including over 500 in 19 states, mostly in the Midwest. As a stock in the restaurant industry, the company is well-positioned to take advantage of broad macro trends such as a better jobs market and lower gas prices. However, unlike others in the space, it is a low beta stock with a beta below 0.65.
