The S&P 500 is heading into first-quarter earnings season at record highs. For now, the battle rages on between momentum investors who see a significant rebound runway ahead for stock prices and value investors who believe inflation and rising interest rates could be a rude awakening for the stock market.
There are plenty of momentum stocks that have a bullish head of steam heading into earnings season. However, experienced traders know a big earnings miss can take all the wind out of a momentum stock’s sails. In fact, even good earnings can be a sell-the-news event for momentum stock investors looking to take profits on winning trades.
Here are five momentum stocks that Bank of America recommends heading into earnings season.
Related Link: 5 Dividend Stocks To Watch Ahead Of Earnings Season
Microsoft Corporation MSFT
Microsoft’s combination of cloud services, professional software and gaming products made the stock a big winner during the social distancing environment in 2020 and that momentum has carried over into 2021 with the stock up another 16% year-to-date.
Bank of America has a Buy rating and $280 price target for MSFT stock. Microsoft is expected to report earnings on April 28. Analysts are expecting EPS of $1.77 on revenue of $41 billion, up 17.2% from a year ago.
Alphabet, Inc. GOOG GOOGL
Google, YouTube and Waymo parent company Alphabet is a giant in online advertising, and analysts are expecting the advertising rebound that started in the second half of 2020 to continue in 2021.
Alphabet shares are already up 29% year-to-date, but Bank of America still has a Buy rating and $2,440 price target for GOOGL stock. Alphabet is expected to report earnings on April 27. Analysts are expecting EPS of $15.79 on revenue of $51.3 billion, up 24.7% from a year ago.
Facebook, Inc FB
Social media and online advertising giant Facebook is also expected to benefit from the same online advertising trends that are driving Google’s growth in 2021.
Facebook shares are up 14.8% so far in 2021, and Bank of America has a Buy rating and $358 price target for FB stock. Facebook is expected to report earnings on April 28. Analysts are expecting EPS of $2.36 on revenue of $23.5 billion, up 32.6% from a year ago.
Home Depot Inc HD
Home improvement was one of the few brick-and-mortar retail subsectors that performed extremely well in 2020 as people stuck at home with nothing to do spent time and money on renovation projects.
Home Depot shares are up another 20.3% so far in 2021, and Bank of America has a Buy rating and $360 price target for HD stock. Home Depot is expected to report earnings on May 18. Analysts are expecting EPS of $2.95 on revenue of $33.8 billion, up 23% from a year ago.
Lowe`s Companies Inc LOW
Lowe’s is Home Depot’s largest competitor and has also generated tremendous momentum from tailwinds in the home improvement industry.
Lowe’s shares are up 25% year-to-date, and Bank of America has a Buy rating and $215 price target for LOW stock. Lowe’s is expected to report earnings on May 19. Analysts are expecting EPS of $2.47 on revenue of $22.9 billion, up 25.2% from a year ago.
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