Major benchmarks posted significant gains over the past one month led by bullish factors like a strong rally in crude and encouraging economic data. Coming to figures, the Dow, S&P 500 and tech-laden Nasdaq Composite Index gained a respective 6.5%, 6.4% and 6.4%.     

Moreover, the Dow moved north for the fifth straight session on Mar 17, ending with a year-to-date gain for the first time this year. Meanwhile, the fear-gauge CBOE Volatility Index (VIX) – a popular measure of volatility – plunged more than 29% in the trailing one month, indicating that the markets are nearing stabilization. At such a juncture, investing in stocks with high year-to-date gains and strong fundamentals may prove to be profitable.

Factors That Drove Markets

Crude Gains: From a 13-year low level of $26.05 a barrel as on Feb 11, the commodity price rebounded to $40.20 per barrel. The impressive upside came on the back of improving demand/supply dynamics, which are rebuilding investors’ confidence in the rebalancing of the oil market.

The improvement in crude prices has been inspiring lately, thanks to the statements made by major oil producers which hint at an impending cut on crude production. In fact, Qatari oil minister Mohammed Bin Saleh Al-Sada has stated that major oil producers, both OPEC and non-OPEC players, will meet in Doha on Apr 17 to discuss a production freeze.

Positive Economic Data: The U.S. Department of Commerce has reported a 5.2% improvement in housing starts in February from January, marking a five-month high seasonally adjusted annual rate of 1,178,000, higher than the consensus estimate of an increase to 1,144,000. Nine-year high gains in construction of single-family houses were the main reason behind the improvement.

Moreover, the core CPI, which excludes food and energy prices, gained 0.3% last month, higher than the consensus estimate of 0.2%. Core CPI increased 2.3% year over year, highlighting the highest increase since May 2012.

FOMC Statement:  After concluding a two-day policy meeting on Wednesday, the Federal Open Market Committee (FOMC) decided to keep interest rates flat between 0.25% and 0.50% and announced that the number of rate hikes this year will be two instead of four as was projected in December. The FOMC has also highlighted that “economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months.” Despite forecasting inflation rates below 2% “in the near term,” Yellen stated, “ihe committee continues to feel that we are on a course where the economy is improving and inflation is moving back up.”

5 Momentum Stocks to Buy

Amid these bullish sentiments, momentum investing should be a winning strategy for investors seeking high returns in the short term. This is because the strategy looks to garner profits by buying stocks that have been on an uptrend over the past few weeks or months. Meanwhile, such stocks are expected to gain momentum buoyed by positive trends.

Given this backdrop, we have highlighted five favorably ranked stocks with momentum score of ‘A’ that have rallied more than 10% over the past one month and have room for more upside in the near term. We have used the Zacks Momentum Style Score to narrow down on stocks with solid prospects and are the safest bet at the moment.

ULTA Salon Cosmetics & Fragrance Inc. (ULTA - Snapshot Report) is a specialty retailer that offers cosmetics, fragrance, haircare, skincare, bath and body products.

This company has a Zacks Rank #1 (Strong Buy) which has gained more than 21% over the past one month. The current year earnings per share (EPS) estimate has been revised upward by 4.1% over the same time frame. The stock has a current year EPS growth estimate of 18.6%, compared to the industry average of 2.9%.

Stamps.com Inc. (STMP - Snapshot Report) is a leading provider of Internet-based postage serviceswith a Zacks Rank #2 (Buy). The stock rallied almost 23% and the current year EPS estimate has moved up by 1.4% over the last one month. The stock has a current year EPS growth estimate of 9.5%.

The Children's Place, Inc. (PLCE - Snapshot Report) – a Zacks Rank #2 stock – is a specialty retailer that primarily sells products like accessories, footwear and apparel for children.

This company has gained almost 20% while its current year EPS estimate has moved north by 4% over the last 30 days. The stock has a current year EPS growth estimate of 12.7%, compared to the industry average of 8.3%.

Thor Industries Inc. (THO - Snapshot Report) is a manufacturer of recreational vehicles with associated parts and accessories.

Thor Industries currently sports a Zacks Rank #1. The stock scaled over 17% in the trailing one month. The current year EPS estimate has also been revised upward by 8.4% over the same time frame. The stock has a current year EPS growth estimate of 25.7%, compared to the industry average of 16%.

Astec Industries, Inc. (ASTE - Analyst Report) is a leading manufacturer and marketer of road building equipment.

This company has Zacks Rank #2 and has gained almost 23% over the past one month. The current year EPS estimate has risen 6.8% in last one month. The stock’s current year EPS growth estimate is pegged at 51.3%, compared to the industry average of -17.7%.