Momentum stocks are those that have experienced sharp upward price movements over a relatively short period.
Momentum investing differs significantly from many of the strategies typically employed by long-term investors. The goal isn't to buy a stock at an attractive valuation. Rather, momentum investors aim to buy stocks that have already gone up considerably to take advantage of the "momentum" in their business -- and in their stock price.
Investors should be aware that there is no single definition of momentum investing. Momentum investors often pay attention to data such as trading volume and like to use technical indicators like moving averages to assess where a stock might go in the short term and guide their strategy. Generally, they look for stocks that are trading above their moving averages as a sign that they will continue moving higher.
It's also worth noting that momentum investing isn't only for stocks that are moving higher. Specifically, short-sellers look to capitalize on stocks on a downward trend. Momentum investing is also a popular strategy among professional investors, such as hedge funds.
Five momentum stocks to put on your radar
The S&P 500 is in a bull market, and the S&P, Dow Jones Industrial Average, and Nasdaq have all reached new highs recently. So, it could be an exciting time to be a momentum investor.
Instead of focusing on pure momentum stocks, let's examine some with excellent business performance that justify their gains.
While there's no way to time the market or know what stocks will gain momentum at any given time, there are some interesting opportunities for patient momentum stock investors.
Keep reading to see five momentum stocks that have already delivered strong results for investors in 2025 that could continue to outperform.
Momentum Trading
| Name and ticker | Market cap | Dividend yield | Industry |
|---|---|---|---|
| Carvana (NYSE:CVNA) | $59.7 billion | 0.00% | Specialty Retail |
| Lemonade (NYSE:LMND) | $5.3 billion | 0.00% | Insurance |
| SoFi Technologies (NASDAQ:SOFI) | $33.0 billion | 0.00% | Consumer Finance |
| Robinhood Markets (NASDAQ:HOOD) | $101.7 billion | 0.00% | Capital Markets |
| Kratos Defense & Security Solutions (NASDAQ:KTOS) | $12.8 billion | 0.00% | Aerospace and Defense |
1. Carvana
NYSE: CVNA
Key Data Points
- Ticker symbol: CVNA
- YTD performance: 124% (12/15/2025)
- Market Cap: $99 billion
- 1-sentence description: Innovative used car platform designed for online shopping and no-haggle pricing.
2. Lemonade
NYSE: LMND
Key Data Points
- Ticker symbol: LMND
- YTD performance: 112% (12/15/2025)
- Market Cap: $5.8 billion
- 1-sentence description: Insurance company focused on AI and automation.
3. SoFi Technologies
NASDAQ: SOFI
Key Data Points
- Ticker symbol: SOFI
- YTD performance: 77% (12/15/2025)
- Market Cap: $34 billion
- 1-sentence description: Online-based banking and financial services company.
4. Robinhood Markets
NASDAQ: HOOD
Key Data Points
- Ticker symbol: HOOD
- YTD performance: 221% (12/15/2025)
- Market Cap: $107 billion
- 1-sentence description: Operates a popular stock and cryptocurrency trading platform.
5. Kratos Defense and Security
NASDAQ: KTOS
Key Data Points
- Ticker symbol: KTOS
- YTD performance: 188% (12/15/2025)
- Market Cap: $13 billion
- 1-sentence description: Develops AI-powered solutions for both military and civilian applications.
Benefits and risks of investing in momentum stocks
The main benefit of investing in momentum stocks is the potential for outsize gains if the stock continues its upward trajectory. The five momentum stocks listed here not only exhibit strong stock price momentum but also demonstrate excellent momentum within their respective businesses.
The other side of this is that momentum stocks tend to exhibit volatility that is significantly greater than that of the typical S&P 500 company. Don't invest in momentum stocks if you can't stomach large price swings, and it's a good idea not to invest with money you can't afford to lose.
Related investing topics
Common mistakes to avoid with momentum investing
There are some major pitfalls to avoid when investing in momentum stocks. The first is underestimating the volatility involved with momentum stock investing. Only invest if you're comfortable with large price swings in the stocks you own.
Another mistake is focusing solely on the stock price, rather than the business itself. In other words, it's one thing for a stock to double in a year. It's another (and better) thing for a stock to double because its business is doing very well.
Momentum stocks can be a good investment
Past performance is not a guarantee of future returns, but it is often a good indicator of positive trends in a business, which can certainly lead to superior returns over time. Plus, bull markets can be a great opportunity to take advantage of strong momentum in excellent, well-run businesses. If you’re looking for stocks that can thrive in the new bull market, this list represents a good starting point.
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