Momentum Ideas: 8 Rallying Stocks With Rising Profit Margins

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 |  Includes: CYBX, EAT, GD, LAVA, LTS, OXM, SYNO, USLM
by: Kapitall

If you're looking for momentum ideas backed up by solid fundamentals, the following list might offer a useful starting point.

To create this list, we started with a universe of about 350 rallying stocks--trading above the 20-day, 50-day and 200-day simple moving averages.

To refine the list, we collected data on annual financial statements, and only focused on companies that have reported rising gross profit margins over the last four years (based on annual filings).

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

For each stock, we'll describe the relevant time interval and change in gross margin.

1. Force Protection Inc. (NASDAQ:FRPT): Engages in the design, manufacture, testing, delivery and support of blast- and ballistic-protected vehicles.

Gross profit margins increased from 11.66% to 13.32% during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, gross margins increased from 13.32% to 14.48% (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, gross margins increased from 14.48% to 20.39% (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). The stock is currently trading 0.88% above the 20-day SMA, 14.53% above the 50-day SMA, and 21.28% above the 200-day SMA.

2. Brinker International Inc. (NYSE:EAT): Develops, operates and franchises various restaurant brands primarily in the United States.

Gross profit margins increased from 15.48% to 15.69% during the first time interval (52 weeks ending 2009-06-24 vs. 52 weeks ending 2008-06-25). For the second time interval, gross margins increased from 15.69% to 15.92% (53 weeks ending 2010-06-30 vs. 52 weeks ending 2009-06-24). And for the final time interval, gross margins increased from 15.92% to 17.29% (52 weeks ending 2011-06-29 vs. 53 weeks ending 2010-06-30). The stock is currently trading 9.05% above the 20-day SMA, 14.96% above the 50-day SMA, and 15.44% above the 200-day SMA.

3. Magma Design Automation Inc. (NASDAQ:LAVA): Provides electronic design automation software products and related services.

Gross profit margins increased from 16.43% to 67.11% during the first time interval (52 weeks ending 2009-05-03 vs. 1 months ending 2008-05-04). For the second time interval, gross margins increased from 67.11% to 83.3% (52 weeks ending 2010-05-02 vs. 52 weeks ending 2009-05-03). And for the final time interval, gross margins increased from 83.3% to 86.04% (52 weeks ending 2011-05-01 vs. 52 weeks ending 2010-05-02). The stock is currently trading 0.93% above the 20-day SMA, 19.14% above the 50-day SMA, and 13.73% above the 200-day SMA.

4. United States Lime & Minerals, Inc. (NASDAQ:USLM): Engages in the manufacture and sale of lime and limestone products in the United States.

Gross profit margins increased from 20.78% to 21.97% during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, gross margins increased from 21.97% to 24.5% (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, gross margins increased from 24.5% to 27.18% (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). The stock is currently trading 4.14% above the 20-day SMA, 10.29% above the 50-day SMA, and 36.08% above the 200-day SMA.

5. Ladenburg Thalmann Financial Services Inc. (NYSEMKT:LTS): Provides a range of financial services primarily to corporate and institutional clients, and high net-worth individuals in the United States.

Gross profit margins increased from 32.4% to 47.17% during the first time interval (12 months ending 2008-12-31 vs. 12 months ending 2007-12-31). For the second time interval, gross margins increased from 47.17% to 57.88% (12 months ending 2009-12-31 vs. 12 months ending 2008-12-31). And for the final time interval, gross margins increased from 57.88% to 65.66% (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). The stock is currently trading 3.32% above the 20-day SMA, 20.58% above the 50-day SMA, and 65.95% above the 200-day SMA.

6. Oxford Industries Inc. (NYSE:OXM): Engages in designing, sourcing and marketing apparel products primarily in the United States and the United Kingdom.

Gross profit margins increased from 39.86% to 48.01% during the first time interval (52 weeks ending 2009-01-31 vs. 35 weeks ending 2008-02-02). For the second time interval, gross margins increased from 48.01% to 49.68% (52 weeks ending 2010-01-30 vs. 52 weeks ending 2009-01-31). And for the final time interval, gross margins increased from 49.68% to 54.21% (52 weeks ending 2011-01-29 vs. 52 weeks ending 2010-01-30). The stock is currently trading 9.41% above the 20-day SMA, 15.01% above the 50-day SMA, and 26.85% above the 200-day SMA.

7. Synovis Life Technologies Inc. (NASDAQ:SYNO): Develops, manufactures and markets mechanical and biological products used by surgical specialties for the repair of soft tissue damaged or destroyed by disease or injury.

Gross profit margins increased from 68.55% to 71.76% during the first time interval (12 months ending 2009-10-31 vs. 12 months ending 2008-10-31). For the second time interval, gross margins increased from 71.76% to 72.26% (12 months ending 2010-10-31 vs. 12 months ending 2009-10-31). And for the final time interval, gross margins increased from 72.26% to 72.88% (12 months ending 2011-10-31 vs. 12 months ending 2010-10-31). The stock is currently trading 17.73% above the 20-day SMA, 37.51% above the 50-day SMA, and 51.61% above the 200-day SMA.

8. Cyberonics Inc. (NASDAQ:CYBX): Engages in the design, development, manufacture, sale and marketing of implantable medical devices that provide vagus nerve stimulation (VNS) therapy for the treatment of refractory epilepsy and treatment-resistant depression.

Gross profit margins increased from 82.6% to 86.04% during the first time interval (52 weeks ending 2009-04-24 vs. 52 weeks ending 2008-04-25). For the second time interval, gross margins increased from 86.04% to 87.54% (53 weeks ending 2010-04-30 vs. 52 weeks ending 2009-04-24). And for the final time interval, gross margins increased from 87.54% to 87.91% (52 weeks ending 2011-04-29 vs. 53 weeks ending 2010-04-30). The stock is currently trading 4.70% above the 20-day SMA, 11.82% above the 50-day SMA, and 13.40% above the 200-day SMA.

*Annual financial data sourced from Google Finance, momentum data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.