Top stocks this month include First Solar, Oak Street Health, and Fair Isaac Corp., all of which have risen more than 100% in the past 12 months while the Russell 3000 Index, a broad measure of the U.S. stock market, is down almost 7%.
Many companies are grappling with a slowing economy, inflation, and a series of rate hikes by the Federal Reserve. The banking crisis, set off in early March with the collapse of Silicon Valley Bank, has only added to the challenges facing companies and investors.
Below, we list the top five stocks in each category: value, growth, and momentum. All data below is as of May 3.
Best Value Stocks
Value investing is a factor-based investing strategy that involves picking stocks you believe are trading for less than what they are intrinsically worth, usually measured by the ratio of the stock’s price to one or more fundamental business metrics. A widely accepted value metric is the price-to-earnings (P/E) ratio. Value investors say that if a business is cheap compared with its intrinsic value (as measured by its P/E ratio, in this case), then the stock price may rise faster than others as the price comes back in line with the worth of the company. These are among the stocks with the lowest 12-month trailing P/E ratio.
|Best Value Stocks|
|?||Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Southwestern Energy Co. (SWN)||4.67||5.1||0.8|
|Azenta Inc. (AZTA)||44.01||3.0||1.6|
|Chesapeake Energy Corp. (CHK)||77.03||10.3||1.6|
|DISH Network Corp. (DISH)||6.99||3.7||1.9|
|Ovintiv Inc. (OVV)||32.94||8.1||2.3|
- Southwestern Energy Co.:?Southwestern Energy is an oil and natural gas explorer and producer with properties in Pennsylvania, Ohio, West Virginia, and Louisiana. In June 2022, the company authorized a $1 billion share repurchase program that can continue through the end of 2023.?Southwestern reported net income of $1.9 billion and a 28% year-over-year revenue decline in the first quarter.
- Azenta Inc.:?Azenta is a life science company specializing in laboratory-based cold sample management and services. In early February, Azenta announced that it would acquire Ziath, a UK-based provider of barcode readers for life sciences applications, and its subsidiaries.?The company also unveiled its Cryo Store Pico, a cryogenic storage system for biological samples for clinical use.
- Chesapeake Energy Corp.:?Chesapeake Energy explores and develops oil and gas properties throughout the U.S. In February, Chesapeake Energy agreed to sell a portion of its Eagle Ford assets to British chemicals company INEOS for approximately $1.4 billion.?In the first quarter of 2023, the company's revenue nearly tripled from the year before and net income totaled $1.4 billion, or $9.60 a share.
- DISH Network Corp.: DISH Network is a TV service provider that offers programming packages, Sling TV, and wireless subscriber plans.
- Ovintiv Inc.: Ovintiv owns and operates various natural gas and oil properties in the U.S. and Canada.
These are the top stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-on-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth.
Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
|?||Price ($)||Market Cap ($B)||EPS Growth Latest Quarter (%)||Revenue Growth Latest Quarter (%)|
|New York Community Bancorp Inc. (NYCB)||9.79||7.1||826||88|
|Chesapeake Energy Corp. (CHK)||77.03||10.3||N/A (see company description)||363|
|Apollo Global Management Inc. (APO)||60.93||34.8||-97||305|
|Performance Food Group (PFGC)||61.60||9.6||820||8|
|Norwegian Cruise Line Holdings Ltd. (NCLH)||14.14||6.0||N/A (see company description)||249|
- New York Community Bancorp Inc.:?New York Community Bancorp operates as a holding company for Flagstar Bank N.A., offering banking products such as checking and money market accounts, specialty loans, and retirement accounts.
- Chesapeake Energy Corp.: See company description above. Note Chesapeake Energy doesn't have an EPS growth figure in the table above because the company reported negative EPS in the first quarter of 2022.
- Apollo Global Management Inc.:?Apollo Global Management is a private equity firm that invests in buyouts, distressed assets, and acquisitions. In March, Apollo Global announced that a fund managed by affiliates has agreed to acquire Univar Solutions, a specialty chemical distributor, in an all-cash transaction totaling $8.1 billion.?On April 17, the company announced a $500 million investment in education technology company Cengage Group.
- Performance Food Group.:?Performance Food Group is a food distribution company that serves restaurants, convenience stores, and hospitals with a wide range of frozen food, snacks, and beverages.
- Norwegian Cruise Line Holdings Ltd.:?Norwegian Cruise Line is a cruise company offering international itinerary packages. Note Norwegian Cruise Line doesn't have an EPS growth figure in the table above because the company reported negative EPS in the most recent quarter.
Stocks With the Most Momentum
Momentum investing is a factor-based investing strategy that involves buying a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors seeking to benefit from the stock’s outperformance will often purchase it, further bidding up its price.
These are the stocks that had the highest total return over the past 12 months.
|Stocks With the Most Momentum|
|?||Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|First Solar Inc. (FSLR)||174.33||18.6||132|
|Oak Street Health Inc. (OSH)||39.00||9.5||116|
|Fair Isaac Corp. (FICO)||752.39||18.8||103|
|Axon Enterprises Inc. (AXON)||220.88||16.1||92|
|World Wrestling Entertainment Inc. (WWE)||108.14||8.1||81|
- First Solar Inc.: First Solar is a solar energy company that makes cadmium telluride solar modules for commercial and industrial uses. Early this year, First Solar sold its 141 MW power plant located in Chile to the company Toesca for an undisclosed amount. On April 27, the company reported first-quarter earnings, with net income of $43 million and total revenue growth of 49%. The company's stock price rose by approximately 25% in the week following earnings.
- Oak Street Health Inc.: Oak Street Health is a healthcare service company that operates primary care facilities throughout the U.S. Oak Street stock jumped in February after CVS announced it would acquire the company for approximately $10.6 billion.
- Fair Isaac Corp.: Fair Issac is a technology company that develops data analytics software. It is best known for its FICO score, a widely-used measure of consumer creditworthiness.
- Axon Enterprises Inc.: Axon Enterprises manufactures and sells conducted energy devices and cloud-based video capture software for use by law enforcement.
- World Wrestling Entertainment Inc.:?World Wrestling Entertainment is a sports entertainment and media company. On April 3, WWE and Endeavor Group Holding announced an agreement to form a new publicly listed company comprised of two sports entertainment brands, WWE and UFC. Endeavor shareholders will have a 51% stake, and WWE shareholders will hold a 49% stake in the new company. WWE shares jumped nearly 18% following the announcement.
Top Stock Investing Advantages
To become a top stock, a company most likely produces positive trends in its earnings, revenue, and share price. Momentum in these areas indicates a well-run business that has the potential to keep generating profit and creating shareholder value.
Investors can use free stock screening sites like Finviz to find top stocks, filtering by both fundamental and technical momentum. For example, a trader could find a top stock by scanning for companies that are trading at a new 52-week high or that have reported higher earnings consistently over the past five years.
Top stocks typically receive extensive media coverage and are followed by leading Wall Street analysts. This usually means more liquidity, leading to better prices and faster trade executions. Moreover, top stocks with ample liquidity are more difficult for larger players to manipulate, helping to keep a fair and orderly market.
Top Stock Investing Risks
Investing only in top large-cap stocks means that investors may miss profitable opportunities in other areas of the stock market. Some of the most significant gains come from small-cap stocks under the radar. For example, an unknown small biotechnology company may announce a breakthrough discovery that propels its share price higher. Even if investors favor trading top stocks, allocating a portion of capital to other stock groups helps avoid missing compelling opportunities.
The trend is your friend—until it's not. Even top large-cap stocks with a track record of earnings growth and creating shareholder value encounter unforeseen challenges. For example, cruise line companies, such as Carnival Corp. (CCL) and Norwegian Cruise Line Holdings Ltd. (NCLH), reported increased revenue in the years leading up to the COVID-19 pandemic but watched their top line sink to unprecedented lows for several years due to no-sail orders and a collapse in passenger demand.
When investing in top stocks, investors should always use a stop-loss order to protect against sudden trend reversals.
YCharts. “Financial Data.”
Southwestern Energy Co. "Southwestern Energy Announces $1 billion Share Repurchase Program."
Southwestern Energy Co. "Southwestern Energy Announces First Quarter 2023 Results."
Azenta Inc. "Azenta Announces the Acquisition of Ziath."
Azenta Inc. "Azenta Lauches Cryo Store Pico, a Novel Automated Cryogenic Storage System for Clinical and Laboratory Applications."
Chesapeake Energy Corp. "Chesapeake Energy Corporation Announces Sale of Second Eagle Ford Package for $1.4 Billion."
Chesapeake Energy Corp. "Chesapeake Energy Corporation Reports 2023 First Quarter Results."
Apollo Global Management Inc. "Univar Solutions to be Acquired by Apollo Funds for $8.1 Billion."
Apollo Global Management Inc. "Cengage Group Announces $500 Million Investment From Apollo Funds."
First Solar Inc. "First Solar Completes Sale of 141 MW Luz Del Norte Power Plant to Toesca."
First Solar Inc. "First Solar Inc. Announces First Quarter 2023 Financial Results."
World Wrestling Entertainment Inc. "Endeavor Announces UFC and WWE to From a +$21 Billion Global Live Sports and Entertainment Company."