The Unsteady Climate in January

January was a turbulent month for Wall Street, as uncertainty around Fed rate cuts marred the first half. However, the release of strong economic data and declining inflation turned the tides in the second half. Despite this positivity, the month ended on a sharp decline after the Fed dispelled hopes of an imminent rate cut in March.

Momentum Likely to Continue

The U.S. economy defied expectations with growth at 3.3% in the fourth quarter of 2023, well above the consensus estimate of 2%. The steady decline in inflation was another boost, with the PCE price index indicating a significant drop compared to the previous year. Additionally, personal spending and consumer confidence showed remarkable growth, pointing toward a positive trajectory for the U.S. economy.

Promising Selections for Investors

Amid the current climate, it’s wise to focus on momentum stocks, particularly those with large market capitalization. Five companies have stood out as top picks due to their strong potential for 2024. Each has a Zacks Rank #1 (Strong Buy) and a Momentum Score of A or B.

Image Source: Zacks Investment Research

The Stars of the Show

Netflix Inc. has seen a rise in paid subscribers and a steady increase in average revenue per subscription, setting the stage for continued dominance in the streaming industry. The company is expected to maintain its control over the market, backed by heavy investments in localized and foreign-language content. With an expected earnings growth rate of 40.7% for the current year, Netflix is displaying robust performance.

The Progressive Corp. continues to thrive on higher premiums, driven by its strong product portfolio and leadership position in the insurance sector. The company’s focus on providing a range of insurance products, including home and auto coverage, is expected to sustain its growth momentum. With an expected revenue growth rate of 12.6% for the current year, The Progressive Corp. is well-positioned for success.

Casey’s General Stores Inc. has delivered impressive results, with significant growth in inside sales and same-store sales. The company’s strategies in price and product optimization, along with digital engagement, are bolstering its position in the industry. Casey’s General Stores is expected to see a 7.4% increase in earnings for the current year, indicating a promising outlook for investors.

Cincinnati Financial Corp. has maintained a disciplined approach in expanding its business, particularly through Cincinnati Re, which has contributed significantly to the company’s earnings. With a focus on agent-driven growth and an emphasis on new business development, Cincinnati Financial Corp. aims to achieve long-term premium growth.