"Buy low, sell high" -- it's a credo many seasoned investors trade to, predicated on the notion that a undervalued stock will eventually stage a price correction. But would it surprise you to know that "buy high, sell higher" has historically shown itself to be the more successful strategy?

Momentum investing, as the latter is called, rejects the notion that what goes up must necessarily come down, at least not right away. The assumption behind it is that stocks don't require a fundamental reason to continue its rise -- the trend itself is often enough to continue the push upward.

So what keeps stocks soaring after the good news has already been priced in? Nothing more or less than human nature.

Momentum traders recognize that rallies have a tendency to attract a following -- everyone wants in on a good "buy" opportunity, and perhaps more importantly, no one wants to be left behind. In the mad rush to invest, a stock's price can soar well beyond its "actual" fair market value -- meaning that the momentum investor who bought high might still be able to sell at a premium.

Here's a list of stocks that momentum traders may want to keep an eye on. To compile the list, we started with the top 200 performing stocks over the last year, all with market caps over $300M. We then narrowed it down by only focusing on those that have seen continued institutional buying over the last three months. Since institutions have the time and resources to thoroughly research their investments, their trades can be a good trend indicators.

The smart money seems to think there's more upside momentum to be priced into these names ... do you? (Click here to access free, interactive tools to analyze these ideas.)

Institutional data sourced from Reuters. The list has been sorted by the change in institutional ownership over the last three months.

Company

Performance Over Last Year

Shares Held by Inst. Investors Today

Shares Held by Inst. Investors 3 Months Ago

% Change in Inst. Ownership Over Last 3 Months

Gold Resource (Nasdaq: GORO)

183.13%

6,515,123

2,413,833

169.91%

Grupo Financiero Galicia (Nasdaq: GGAL)

173.91%

10,621,189

4,201,395

152.80%

VirnetX Holding (NYSE: VHC)

263.99%

7,347,084

4,525,496

62.35%

Entropic Communications (Nasdaq: ENTR)

250.94%

87,917,539

58,568,052

50.11%

Amarin Corporation (Nasdaq: AMRN)

356.69%

47,668,869

32,618,263

46.14%

American Oil & Gas (NYSE: AEZ)

198.24%

30,975,539

21,244,083

45.81%

Power-One (Nasdaq: PWER)

172.03%

102,070,443

73,056,158

39.72%

Oncolytics Biotech (Nasdaq: ONCY)

136.30%

1,666,382

1,210,728

37.63%

Interactive Chart: Press Play to compare market cap changes for all the stocks mentioned above.


Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

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