Buy Momentum Stocks NVIDIA & Vistra as S&P 500 Aims for 7,000

Market Overview - The S&P 500 index has surpassed 6,000, driven by U.S. economic growth and a robust labor market, with expectations of a favorable stock market environment under the Trump administration in a low interest rate scenario [1] - Equity strategist Christopher Harvey from Wells Fargo forecasts the S&P 500 to reach 7,007 by 2025, while Yardeni Research and Deutsche Bank predict it will finish at 7,000 next year [1] Investment Strategy - Investors are encouraged to capitalize on the current market uptrend by investing in S&P 500 momentum stocks, utilizing Richard Driehaus' "buy high and sell higher" strategy [2] - Selected momentum stocks include NVIDIA Corporation (NVDA) and Vistra Corp. (VST), which align with the Driehaus strategy [2] Driehaus Strategy Insights - Richard Driehaus emphasizes the preference for investing in stocks that are increasing in price rather than those in decline, indicating a focus on momentum [3] - The Association of Individual Investors (AAII) considers the percentage 50-day moving average as a key criterion for portfolio creation based on Driehaus' philosophy [4] Screening Parameters - The strategy incorporates a calculation based on the month-end price and the 50-day moving average, with a positive percentage indicating an uptrend [5] - AAII highlights the importance of strong earnings growth rates and companies with a history of beating estimates for selecting potential outperformers [6] Stock Selection Criteria - Stocks are filtered using Zacks Research Wizard Tool, focusing on those with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) and a Momentum Score of A or B, which historically show better upside potential [8] - Key parameters include: - Zacks Rank less than or equal to 2, indicating a history of outperformance [9] - Last 5-year average EPS growth rates above 2%, ensuring improving business [10] - Trailing 12-month EPS growth greater than 0 and industry median, indicating superior earnings performance [10] - Positive percentage change in 50-day moving average and relative strength over 4 weeks, signaling an uptrend [10] - Momentum Score equal to or less than B, indicating high probability of success [11] Selected Stocks - NVIDIA is recognized as a leader in visual computing technologies with a Zacks Rank of 2 and a Momentum Score of B, showing a trailing four-quarter earnings surprise of 9.8% on average [12] - Vistra operates as an integrated retail electricity and power generation company, holding a Zacks Rank of 1 and a Momentum Score of B, with a trailing four-quarter earnings surprise of 7.1% on average [13]