Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

Looking for momentum ideas? If you're interested in trading with a stock's momentum, here are some ideas to start your stock search.

We ran a screen on stocks of the S&P 500 outperforming the index, with over 20% returns over the last quarter. We then screened these stocks for those with encouraging inventory trends relative to revenue: growth in revenue exceeding growth in inventory year-over-year, as well as inventory becoming a smaller portion of current assets, indicating a strong liquidity position as well.

To understand why these trends are positive, think why the opposite trends would appear negative. If a company were seeing faster growth in inventory than revenue, it may indicate that the company is having trouble selling its inventory.

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

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these stocks will continue to outperform? Use this list as a starting point for your own analysis.

List sorted alphabetically.

1. Advanced Micro Devices, Inc. (NYSE:AMD): Operates as a semiconductor company in the United States, Japan, China, and Europe. The stock rose 25.75% over the last quarter. Revenue grew by 2.55% during the most recent quarter ($1,691M vs. $1,649M y/y). Inventory grew by -24.68% during the same time period ($476M vs. $632M y/y). Inventory, as a percentage of current assets, decreased from 17.58% to 14.74% during the most recent quarter (comparing 13 weeks ending 2011-12-31 to 13 weeks ending 2010-12-25).

2. The Home Depot, Inc. (NYSE:HD): Operates as a home improvement retailer. The stock rose 25.89% over the last quarter. Revenue grew by 4.39% during the most recent quarter ($17,326M vs. $16,598M y/y). Inventory grew by -2.51% during the same time period ($10,717M vs. $10,993M y/y). Inventory, as a percentage of current assets, decreased from 72.92% to 69.24% during the most recent quarter (comparing 13 weeks ending 2011-10-30 to 13 weeks ending 2010-10-31).

3. LSI Corporation (NASDAQ:LSI): Designs, develops, and markets storage and networking semiconductors and storage systems worldwide. The stock rose 28.98% over the last quarter. Revenue grew by 11.15% during the most recent quarter ($523.14M vs. $470.66M y/y). Inventory grew by -3.62% during the same time period ($180M vs. $186.77M y/y). Inventory, as a percentage of current assets, decreased from 14.78% to 12.65% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

4. Pall Corp. (NYSE:PLL): Manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. The stock rose 20.25% over the last quarter. Revenue grew by 16.54% during the most recent quarter ($705.64M vs. $605.48M y/y). Inventory grew by 0.5% during the same time period ($456.66M vs. $454.41M y/y). Inventory, as a percentage of current assets, decreased from 26.14% to 25.82% during the most recent quarter (comparing 3 months ending 2011-10-31 to 3 months ending 2010-10-31).

5. Wyndham Worldwide Corporation (NYSE:WYN): Provides various hospitality products and services to individual consumers and business customers in the United States and internationally. The stock rose 20.74% over the last quarter. Revenue grew by 13.8% during the most recent quarter ($1,212M vs. $1,065M y/y). Inventory grew by 0.3% during the same time period ($337M vs. $336M y/y). Inventory, as a percentage of current assets, decreased from 20.97% to 20.13% during the most recent quarter (comparing 3 months ending 2011-09-30 to 3 months ending 2010-09-30).

6. Zimmer Holdings, Inc. (NYSE:ZMH): Engages in the design, development, manufacture, and marketing of orthopaedic reconstructive implants, spinal and trauma devices, dental implants, and related surgical products. The stock rose 21.56% over the last quarter. Revenue grew by 2.87% during the most recent quarter ($1,167.3M vs. $1,134.7M y/y). Inventory grew by -0.7% during the same time period ($929.8M vs. $936.4M y/y). Inventory, as a percentage of current assets, decreased from 31.11% to 28.38% during the most recent quarter (comparing 3 months ending 2011-12-31 to 3 months ending 2010-12-31).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 6 Outperforming S&P 500 Stocks With Encouraging Inventory Trends