Top 5 Momentum Stocks for 2016

We're approaching the end of the year so prepare for a lot of talk about the "Best of 2015" and predictions for what people believe will be the "Best of 2016." It's only natural for us to reflect on what's happened and attempt to apply what we've learned to next year. But let's be honest here, you already knew how to make money in this market. You've been doing it all along by following our Zacks Rank.

This year, I suspect, will be no different. I'm talking about a ranking system that's given us 26% returns on average dating back to 1988. That's a long time and a track record that's nothing short of phenomenal. When looking for the top stocks for this year, don't reinvent the wheel. The formula that's worked great all along shouldn't stop working just because of some pesky Fed liftoff or market volatility.

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I'm talking about Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks that within a few percentage points of their 52-week highs, with Momentum Style Scores of "A" or "B." This way, you get into stocks with the most bullish sentiment coming from analysts, breaking through to uncharted territory on increased investor interest. That's a solid combination that's been finding me outstanding stocks for years now.

These five stocks are my top ideas to close out 2015 and enter 2016 riding a wave of momentum I believe can carry you to profits to kick off the year.

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NVIDIA Corporation operates as a visual computing company in the United States, Taiwan, China, the rest of Asia Pacific, Europe, and other Americas. The company operates through two segments, GPU and Tegra Processors. Its products are used in gaming, enterprise, high performance computing and cloud, and automotive markets. The company sells its products primarily to original equipment manufacturers, original design manufacturers, system builders, motherboard manufacturers, add-in board manufacturers, and retailers/distributors.

This stock was dormant from February to July as investors weighed the value of its GPU business. But with a blow-out earnings report came increased interest from investors as many realized this company is much bigger than GPUs. Their foray into autonomous vehicles and other automotive electronics will drive this stock much higher into 2016. It's come very far in a short period of time, with shares jumping 50% in a few short months. As long as the shift in automotive technology continues at this pace, I believe these shares can continue to rally.

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Photronics ( PLAB )

Photronics, Inc., together with its subsidiaries, manufactures and sells photomasks in the United States. Photomasks are high precision photographic quartz plates containing microscopic images of electronic circuits. It offers photomasks for the use in the manufacture of semiconductors and flat panel displays (FPDs), as well as for use as masters to transfer circuit patterns onto semiconductor wafers and flat panel substrates during the fabrication of integrated circuits, FPDs, and other types of electrical and optical components.

PLAB has come on strong since bottoming out ahead of its August earnings report. This really began to heat up as shares approached the 52-week highs near $10.50 in November. A push above that level, followed by a big uptick in volume, put the market's stamp of approval on the breakout. Shares are currently consolidating at a high volume node near $12.50.

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Hormel Foods ( HRL )

Hormel Foods Corporation produces and markets various meat and food products worldwide. The company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other. It provides various perishable meat products, including fresh meats, frozen items, refrigerated meal solutions, sausages, hams, wieners, and bacon; and shelf-stable products comprising canned luncheon meats, shelf-stable microwaveable meals, stews, chilies, hash, meat spreads, flour and corn tortillas, salsas, tortilla chips, peanut butter, and other products.

Hormel shares traded within a tight range between $54 and $58 for the first several months of this year. But since breaking out in early August, shares have continued to march higher as volume has steadily increased. The latest move from $68 to just below $80 happened in a little over a month. The commodity channel index (CCI) is a bit overbought here, indicating that shares may be due for a bit of a pullback. But as long as volumes rise, I don't think it will happen any time soon.

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Ulta Salon ( ULTA )

Ulta Salon, Cosmetics & Fragrance, Inc. operates as a specialty retailer in the United States. The company's stores provide cosmetics, fragrance, haircare, skincare, bath and body products, and salon styling tools. Further, it offers private label products consisting of Ulta branded cosmetics, skincare, bath and body products, and haircare products; and other health and beauty products. As of August 1, 2015, it operated 817 stores in 48 states. Its full-service salon in its stores offers haircuts, hair coloring, and texturizing, as well as facials and waxing; and offers its products through its Website,

Ulta shares haven't been on the same trajectory as many of the other stocks here in this article. While most have steadily climbed all year, Ulta has earned it the hard way with a series of consolidations followed by breakouts above the range. This latest push above $175 may be setting up for a move to $200 as shares currently trade $10 above the 21-day moving average down at $176.62. The CCI has come down from an extremely overbought 200 level to 46.15. This may be a pause before the next push higher.

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CubeSmart ( CUBE )

CubeSmart is an equity real estate investment trust. The firm invests in the real estate markets of the United States. It engages in ownership, operation, acquisition and development of self-storage facilities. The firm was formerly known as U-Store-It Trust.

CUBE shares have been on fire since breaking through it's then 52-week high just above $26.50 in mid-September. From there, shares have bounced along the 21-day moving average for the most part. A few large volume spikes along the way could be hinting at increased institutional interest in this stock.

Bottom Line

Your mom's not changing the ingredients on her secret egg nog recipe every year, so why are you trying to switch up your investment style? Like a wise man once said, "If it ain't broke, don't fix it." Ride the strength of the Zacks Rank, the momentum of these stocks, and the increased investor interest to profits to kick off the New Year.

Be sure to click FOLLOW THE AUTHOR above to stay on top of all the hot momentum stocks at David Bartosiak is the Momentum Stock Strategist with Zacks, editor of the Momentum Trader and Home Run Investor, and host of " Trending Stocks"

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

ULTA SALON COSM (ULTA): Free Stock Analysis Report

PHOTRONICS INC (PLAB): Free Stock Analysis Report

NVIDIA CORP (NVDA): Free Stock Analysis Report

HORMEL FOODS CP (HRL): Free Stock Analysis Report

CUBESMART (CUBE): 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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