Impressive Momentum and Stable Financial Foundations

Are you looking for momentum stocks with high free cash flow yield and potential for growth in 2024? According to Piper Sandler, there are still opportunities to be found in the market, despite the S&P 500 reaching a new record high.

In a recent update, Piper Sandler’s chief investment strategist, Michael Kantrowitz, emphasized the strong fundamentals of current momentum stocks compared to past market cycles. He believes that there is still room for these stocks to continue their upward trajectory.

Contrary to popular belief, tech- and AI-related names are not the only leaders in the momentum trade. Kantrowitz noted that momentum is more broad-based than commonly thought. He also highlighted the importance of high-quality stocks with a high free cash flow yield as a key factor for success in 2024.

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In a recent report, Kantrowitz shared a list of stocks in the S&P 1500 index that exhibit strong momentum and have a high free cash flow yield. Some of the highlighted names included Gap, Cigna, and Wells Fargo, each of which has shown significant growth this year.

Gap, for instance, has seen a 30% rally in 2024 with a free cash flow yield of 10.8%. Cigna, a health insurance giant, has also experienced an 18% increase this year and has a free cash flow yield of 9.1%. Wells Fargo, with a 16% rise in 2024, boasts a free cash flow yield of 16.2%.

Analysts have expressed optimism about these stocks, with JPMorgan upgrading Gap and Barclays initiating coverage on Cigna with an overweight rating and a price target representing an 11% upside from current levels.

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If you’re looking for potential investment opportunities in the momentum stock space with strong fundamentals and growth potential, these names may be worth considering in your portfolio for the year ahead.

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