4 Hot Momentum Stocks In The Industrial Sector

The global economy is still fraught with uncertainties with many developed and emerging nations struggling for growth or revival. Evidently, the world’s output growth projection has been lowered by 0.1% to 3.1% for 2016 and to 3.4% for 2017 by the International Monetary Fund.  

In addition to the adversities of unfavorable foreign currency, the Chinese economy is trying to cope with the negative impacts of capital outflows while Japan is facing headwinds from low investment levels, aging population and a huge public debt. Also, the decision of United Kingdom to exit the European Union has added to the existing concerns in the global economy.

Talking about the U.S. economy, the country has a weak job market, with an unemployment rate of 4.9%. Its industrial sector is facing risks from lower export demands and weak investments. Industrial production, one of the prime economic indicators for the industrial sector, was down 1% year over year in second-quarter 2016. In addition, the collective performance of the sector’s stocks in the S&P 500 group was weak, with earnings and revenues down 1.5% and 5.6% year over year, respectively.

However, we believe that governmental policies promoting better trade relations, increased infrastructural investments, emphasis on job creation and high consumer-end demand can brighten the future for the industrial sector, going forward.

Momentum Investing to the Rescue

In such a scenario picking stocks for investors interested in the industrial sector can be a daunting task. If the investor is ready to ride on the price trend of the stock, then Momentum investing can be a solution.

This strategy works for short-term investors who prefer to profit from either buying stocks during an uptrend in price movement or selling a stock during a downtrend. However, these trends should be supported with adequate volume movements. Also, stocks believed to outperform the market can be good picks for momentum traders.

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