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5 Smart Momentum Stocks to Buy

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I know what you're thinking. This market is bouncing all over the place and there is very little leadership. At a time like this where China is collapsing, the domestic market is experiencing tremors and the Fed's about to raise rates, how could I possibly be talking about momentum stocks? I mean, am I crazy?

You see, that's just the thing. Even in a market this wild, where zigs seem to zag and yins seems to yang there are still momentum stocks to be found. Sure in a raging bull market it's easy to find these stocks. Heck, throw some letters up on a dart board and go a few rounds and you'll find plenty of tickers that seem to be momentum stocks. Where the real bread and butter is made is during rough markets like this. This is where we separate the Pit from the Poodles and the platinum from white gold.

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The formula is the same, the constraints just widen a bit. There are still key characteristics of top momentum stocks that we are going to see in every market. We still want to have Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks . The Zacks Rank has withstood the test of time, dating back to 1988, so of course we have to start there.

Then sprinkle in a Momentum Style Score of "B" or better. This knocks out a lot of the screening process for us as the score takes into account many factors including volume change and performance relative to its peers. All I have to do is put the cherry on top by looking for stocks within 10% of their 52-week high. This is the only criteria I need to change in a rough market as a selloff will drop stocks across the board. The ones that remain near their highs are even more remarkable in markets like this and stocks you should really take note of.

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Express ( EXPR )

Express is a specialty apparel and accessories retailer of women's and men's merchandise, targeting the 20 to 30 year old customer. The Company has over 30 years of experience offering a distinct combination of fashion and quality for multiple lifestyle occasions at an attractive value addressing fashion needs across work, casual, jeanswear, and going-out occasions. The Company currently operates over 600 retail stores, located primarily in high-traffic shopping malls, lifestyle centers, and street locations across the United States, in Canada and in Puerto Rico.

Tough to argue against buying a stock like this. Look at the huge jump in price after the earnings report in the wake of the China market meltdown. This has been the most resilient stock this market. With a breakout imminent this is one of the top stocks to own today.

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JAKKS Pacific ( JAKK )

JAKKS Pacific, Inc. (NASDAQ: JAKK ) is a leading designer and marketer of toys and consumer products with a wide range of products that feature popular brands and children's toy licenses. JAKKS' diverse portfolio includes Action Figures, Electronics, Dolls, Dress-Up, Role Play, Halloween Costumes, Kids Furniture, Vehicles, Plush, Art Activity Kits, Seasonal Products, Infant/Pre-School, Construction Toys, Ride-On Vehicles, Wagons, Inflatable Environments and Tents, Impulse Toys and Pet Products sold under various proprietary brands.

JAKKS has been forming a nice consolidation here over the last couple months that sort of looks like an elongated bullish triangle or pennant. We all know I'm not the biggest pattern-recognition guy, more of a moving average and volume and price analyst. Still it's butting up against the highs here and a breakout at that $10 level could take this stock to an entirely new plane of existence.

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Signet Jewelers ( SIG )

Signet Jewelers is the largest specialty jewelry retailer in the US, UK and Canada. Signet operates approximately 3,600 stores primarily under the name brands of Kay Jewelers, Zales, Jared The Galleria Of Jewelry, H.Samuel, Ernest Jones, Peoples and Piercing Pagoda. The company's annual sales of approximately $6 billion derive from the retailing of jewelry, watches and associated services.

Similar story to EXPR here as earnings caused a big jump in the stock, setting it into a different orbit. The bullish attitude stems from new highs being made on this probe upward. The bearish side growls at the failure to close above the $140 level. Still, with support at the bottom of the gap up on earnings at $132, you've got a very nice risk/reward scenario here.

Click "Follow the Author" above for free weekly picks! Twitter @bartosiastics

Constellation Brands ( STZ )

Constellation Brands (NYSE: STZ and STZ.B) is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy. Constellation is the number three beer company in the U.S. with high-end, iconic imported brands including Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico. Constellation is also the world's leader in premium wine selling great brands that people love including Robert Mondavi, Clos du Bois, Kim Crawford, Rex Goliath, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company's premium spirits brands include SVEDKA Vodka and Black Velvet Canadian Whisky.

What happened here that woke up this sleeping giant? An extended consolidation period from March through August was suddenly shattered as shares broke up to fresh highs at $130. The rough market sabotaged that breakout but the retracement only took us to the bottom end of that consolidation range where the buyers promptly stepped back in. Hovering near $130 here I feel like the worst is over.

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Smith & Wesson ( SWHC )

Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a U.S.-based leader in firearm manufacturing and design, delivering a broad portfolio of quality firearms, related products, and training to the global military, law enforcement, and consumer markets. The company's brands include Smith & Wesson®, M&P®, and Thompson/Center Arms™. Smith & Wesson facilities are located in Massachusetts, Maine, Connecticut, and Missouri.

This stock has been impressing me since the start of the year. Trading below $10 in January, SWHC has consistently broken out to new highs again and again. Just when you think the momentum is gone it finds another gear and gets to work. This is something you can buy and forget about for a few years.

Click "Follow the Author" above for free weekly picks! Twitter @bartosiastics

Bottom Line

There is momentum in every market, you just need to know where to look. While these stocks may not be breaking out to new highs, they are certainly threatening to. With a few more bullish days in the market these may become the breakout performers of the fall.

Be sure to click FOLLOW THE AUTHOR above to stay on top of all the hot momentum stocks at Zacks.com. David Bartosiak is the Momentum Stock Strategist with Zacks and editor of the Momentum Trader

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SMITH & WESSON (SWHC): Free Stock Analysis Report

CONSTELLATN BRD (STZ): Free Stock Analysis Report

SIGNET JEWELERS (SIG): Free Stock Analysis Report

JAKKS PACIFIC (JAKK): Free Stock Analysis Report

EXPRESS INC (EXPR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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