Momentum investing is based on the idea that stocks that have risen recently will tend to keep rising and that stocks that have fallen tend to keep falling. In 1993, researchers Narasimhan Jegadeesh and Sheridan Titman at UCLA brought the idea forward.
Momentum investing has held up over the past 10 years. Looking at the iShares MSCI USA Momentum Factor ETF (BATS: MTUM), it's seen that the fund has outperformed the S&P 500 over that period. The fund has notched a cumulative total return of 251%, versus the 245% total return of the SPDR S&P 500 ETF Trust.
Below I'll point out three of my favorite companies that are currently considered momentum stocks.
Intuitive Surgical: Revolutionizing the Operating Table
Intuitive Surgical's (NASDAQ: ISRG) shares have provided a total return of 66% over the past twelve months, beating out the S&P 500 by 30%. This company stands out due to the incredible products it has built. Its primary product is the da Vinci robot.
This is a remotely controlled robot that assists doctors in performing surgeries. Its main advantage is in reducing the human error involved in surgeries. It eliminates the risk of things like hand tremors in surgeons and can make smaller, more precise cuts than a human. This reduces the invasiveness of surgeries and allows patients to have shorter ...
