Momentum Investors Are Now Buying Shares of Apple, Amazon and Netflix: Here's Why
Momentum investing is a strategy that involves buying stocks that have been performing well and selling those that have been lagging behind. Momentum investors believe that the market trends will continue in the same direction, and they aim to profit from the price movements of the hottest stocks.
Recently, some of the most popular momentum stocks have been those of Apple, Amazon and Netflix. These three tech giants have been dominating their respective markets and delivering impressive growth and earnings. Here are some of the reasons why momentum investors are now buying shares of these companies:
Apple: Apple is the world's most valuable company, with a market capitalization of over $2.5 trillion. The company has been enjoying strong demand for its products and services, especially its iPhone 12 lineup, which supports 5G technology. Apple also has a loyal customer base and a thriving ecosystem of software and hardware, including its Mac computers, iPads, AirPods, Apple Watch, Apple TV, Apple Music and more. Apple is also expanding into new areas such as augmented reality, autonomous vehicles and healthcare. Analysts expect Apple to grow its revenue by 13% and its earnings by 11% in fiscal 2023.
Amazon: Amazon is the world's largest online retailer, with a market share of over 40% in the U.S. e-commerce market. The company has been benefiting from the surge in online shopping amid the pandemic, as well as its diversified offerings such as cloud computing, digital advertising, streaming video and music, smart devices, gaming and more. Amazon also has a loyal customer base and a competitive advantage with its Prime membership program, which offers free shipping, exclusive deals and access to various services. Analysts expect Amazon to grow its revenue by 15% and its earnings by 35% in fiscal 2023.
Netflix: Netflix is the world's leading streaming entertainment service, with over 200 million paid subscribers in more than 190 countries. The company has been investing heavily in original content across various genres and languages, as well as acquiring rights to popular shows and movies from other studios. Netflix also has a loyal customer base and a competitive advantage with its personalized recommendations, user-friendly interface and global reach. Analysts expect Netflix to grow its revenue by 16% and its earnings by 41% in fiscal 2023.
These three stocks have been outperforming the broader market in the past year, as shown by the chart below:
Momentum investors are now buying shares of these companies because they believe that they will continue to dominate their markets and deliver strong growth and earnings in the future. They also expect these stocks to benefit from positive market sentiment and favorable technical indicators.
However, momentum investing is not without risks. These stocks are also subject to high volatility, valuation concerns, competition threats and regulatory uncertainties. Momentum investors should be prepared to face sharp price swings and adjust their positions accordingly. aa16f39245