Momentum investing appears to have pretty good momentum.
Nine of the top 15 stocks from The Times' last Power Ratings, published June 29, have gained ground. And despite some big losers, the momentum-oriented portfolio has outperformed the blue-chip Standard & Poor's 500 index, gaining 7.7% on average in the last eight weeks, versus 2.2% for the benchmark.
The best performers have been Harmonic Inc., which makes digital and fiber-optic systems and whose shares have risen 80%; telecom company Qualcomm Inc., up 36%; and Zomax Inc., an outsourcing specialist for technology firms, up 31%.
All three also have snagged spots in the latest update of our Power Ratings screen, provided by Zacks Investment Research Inc.
The Power Ratings are designed to show which stocks have the greatest recent upward, or downward, momentum by three measures: share price, earnings estimates and analyst ratings.
The biggest blemish from the June 29 screen has been equipment leasing specialist First Sierra Financial Inc., which topped the rankings but has sunk 47% since. Rumors of insufficient reserves have hurt the stock, although at least one analyst called them unfounded. Market maker Knight/Trimark Inc., which reported fast-rising profit as well as some insider selling, has skidded 34%.
As you might expect, neither stock made the cut this time around.
The bottom 10 stocks from the previous screen, meanwhile, mostly lived up to their billing by staying cold. But KN Energy Inc. turned things around, zooming 51%.
The top-rated stocks in the latest screen, based on data through Friday, include several companies in the biotech, semiconductor, electronics equipment and telecommunications sectors.
Drug developer Millennium Pharmaceuticals Inc. of Cambridge, Mass., tops the list, followed by Sunnyvale, Calif.-based Harmonic; San Diego-based IDEC Pharmaceuticals, whose products target cancer and autoimmune diseases; Greensboro, N.C.-based RF Micro Devices Inc., which makes circuits for wireless communication; and Plymouth, Minn.-based Zomax.