These Momentum Stocks Are On a Roll

You don't have to wait for momentum stocks to move -- they've already been moving.

Feb 6, 2014 at 9:58PM

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some momentum stocks to your portfolio, but don't have the time or expertise to handpick a few, the iShares MSCI USA Momentum Factor ETF (NYSEMKT:MTUM) could save you a lot of trouble. Instead of trying to figure out which momentum stocks will perform best, you can use this ETF to invest in lots of them simultaneously. It invests in mid-cap and large-cap stocks exhibiting momentum characteristics.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. This ETF, focused on momentum stocks, sports a very low expense ratio -- an annual fee -- of 0.15%. The fund is fairly small, too, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This momentum-stocks ETF is too young to have a track record worth assessing. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why momentum stocks?
If you like the idea of investing in stocks that have been appreciating because you think they're likely to keep doing so, then the momentum stocks selected for the MSCI USA Momentum Index and this corresponding ETF should be of interest. (Just know that no stocks keeps rising forever, or even in a straight line. It's smart to have a handle on your holdings' businesses, looking beyond just their stock price movements.)

More than a handful of momentum stocks had strong performances during the past year. Gilead Sciences, (NASDAQ:GILD), for example, surged 96%. Bulls are very excited about its recently approved oral hepatitis-C treatment, Sovaldi, with its reported cure rates near 90% in clinical trials. The company just posted strong fourth-quarter results, with revenue up 21% on strong new-product sales. Sovaldi is new to market, but has the potential to become a blockbuster, with sales exceeding $1 billion. Meanwhile, Gilead's HIV drug Stribild saw sales quintuple over the year-ago quarter. (NASDAQ:PCLN) popped 62%, with its price now above $1,100 per share. In its third quarter, both bookings and gross profit grew by more than 35% (year over year), and it's seeing more impulse buying via its mobile apps. has been growing in part via savvy acquisitions, such as, and with its,, and sites, it offers much more than flight bargains, such as hotel rooms, cruises, and rental cars. With a forward P/E ratio below 20, stock seems to have more room to run. Its net margin was recently about 28%, and has been growing.

Walgreen (NASDAQ:WBA) gained 43% during the past year. Its dividend yields 2.3% and has been growing aggressively, with an average annual increase topping 20%.) Its last quarter was strong, but it hasn't been growing as briskly as CVS Caremark. Walgreen's pharmacy business is positioned to do well domestically and abroad, thanks to some savvy partnerships. With CVS Caremark recently announcing plans to stop selling cigarettes (and give up $2 billion in annual revenue), some wonder whether Walgreen will follow suit.

Other momentum stocks didn't do quite as well over the last year, but could see their fortunes change in the coming years. United Parcel Service (NYSE:UPS) advanced 19% and offers an appealing 2.6% dividend yield, too. UPS is poised to prosper as e-commerce grows, but this past holiday season proved to be a challenge due to high demand. United Parcel Service is pursuing new revenue sources, too, such as 3-D printing, which it will be offering in its stores. Its fourth quarter featured net income down 5% due to rising costs. Management expects earnings to grow by double digits in 2014.

The big picture
If you're interested in adding some momentum stocks to your portfolio, consider doing so via an ETF. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Psst... interested in six fast-growing stocks?
Motley Fool co-founder David Gardner has proved skeptics wrong, time and time again, with stock returns such as 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Selena Maranjian, whom you can follow on Twitter, owns shares of Gilead Sciences and The Motley Fool recommends Gilead Sciences,, and United Parcel Service. The Motley Fool owns shares of Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers