What are we screening for?
U.S.-listed consumer discretionary stocks exhibiting strong price momentum.
The Screen
The first half of 2024 has been anything but dull for investors. The S&P 500 index rose by more than 15 per cent, markets were battling rising inflation and a high interest rate environment, and the AI revolution sparked a run in many stocks with exposure to chip manufacturing and information technology hardware and services. Companies such as Nvidia Corp. and Super Micro Computers Inc. have been some of the top-performing names, and we can see the broader impact when considering the S&P Information Technology Sector Index is up more than 31 per cent in the first six months of the year. That’s more than double the performance of the S&P 500 index. While these gains have been impressive, using a “relative rotation graph” the S&P Information Technology Sector Index has been weakening over the past 20 days. (Relative rotation measures recent momentum to see how sectors are evolving.) During this 20-day period, the S&P Consumer Discretionary Sector Index has moved from lagging to leading, and this sector currently has the strongest momentum of all sectors within the S&P 500 index. Today, we screen for U.S.-listed consumer discretionary stocks with strong price momentum that should see their price momentum continue.
- First, we screen for U.S.-listed consumer discretionary companies with a market capitalization greater than US$1-billion.
- Next, we screen for companies that have demonstrated strong price momentum. The Starmine Price Momentum model includes a blend of short, mid-, long-term, and industry-specific components, and recognizes the tendency of long-term trends to revert to their long-term mean. Higher scores indicate stocks with the strongest price momentum. We screen for companies with a score greater than 95, with 100 being the highest score, representing companies in the top 5 per cent for price momentum.
- Finally, we screen for companies with a one-month positive price return to focus on companies with strong recent price performance.
More About London Stock Exchange Group
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What We Found
The screen, ranked by the StarMine Price Momentum Model, produced nine companies, all of which are members of the hotels, restaurants, and leisure industry.
Marriot International Inc. MAR-Q, which scored 99 on the Starmine Price Momentum Model, is an operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties under various brand names. Following the company’s first-quarter earnings release in May, management provided guidance of year-over-year EBITDA growth of 7 per cent to 9 per cent, primarily driven by demand in Asia, Europe, and the Middle East. Marriot added 558 properties and more than 81,000 rooms to its portfolio in 2023, and has 3,379 properties in its worldwide development pipeline, showing that the company is poised to capitalize on continued growth in the international leisure space. China and the United States have been the two softest markets for Marriot this year, and a turnaround in these countries could lead to positive upside for the stock.
MakeMyTrip Ltd. MMYT-Q, which scored 100 on the Starmine Price Momentum Model, is an online travel provider operating various internet-based platforms with segments including air ticketing, hotels and packages, and bus ticketing. MakeMyTrip are the pioneers of online travel booking in India and had the highest one-year total return of the screen at over 218 per cent. The company has booked more than 72 million unique customers, and three out of every 10 domestic flyers in India book with MakeMyTrip. The company has been able to reduce advertising and promotional expenses, which has led to increased margins. Those profits have been further boosted by revenue growth. The company has beat revenue estimates for five consecutive quarters, demonstrating a track record of strong performance, and MakeMyTrip is well positioned to benefit from trends of higher disposable income for travel and leisure spending.
Investors are advised to do their own research before trading in any of the securities shown.
Stephen Donovan, MBA, is a Senior Customer Learning Manager at LSEG, covering cross-asset trading for the LSEG Academy.