3 Momentum Anomaly Stocks to Buy as Geopolitical Risks Drag Markets

Market Overview - The U.S. equity markets experienced a significant downturn due to geopolitical threats from President Donald Trump, particularly regarding the acquisition of Greenland, which has led to military support from several EU countries [1] - The U.S. government has threatened to impose substantial tariffs on EU nations, prompting discussions of a potential 'trade bazooka' as a deterrent [1][2] Earnings Season and Investment Strategies - The ongoing unrest in Iran has contributed to a decline in equity markets, which may negatively impact the earnings season that has started modestly with banking stocks [2] - Investors are turning to momentum stocks, such as Kohl's Corporation (KSS), Albemarle Corporation (ALB), and Alcoa Corporation (AA), as a strategy to achieve sustained profits amid market volatility [2] Momentum Investing - Momentum investing is characterized by the strategy of "buying high and selling higher," based on the belief that established trends are likely to continue [3] - This investment approach capitalizes on the human tendency to project current trends into the future before mean reversion occurs [3] Screening Parameters for Momentum Stocks - The screening process identifies the top 50 stocks with the best percentage price change over the last 52 weeks, ensuring selection of stocks that have appreciated steadily [5] - From these, the bottom 10 performers over a one-week period are chosen to identify those experiencing short-term pullbacks [6] - Stocks with a Zacks Rank 1 (Strong Buy) and a Momentum Style Score of B or better are prioritized, indicating a higher probability of success [7] Selected Stocks - Kohl's Corporation (KSS) has seen a price increase of 43.2% over the past year but experienced a 5.7% decline in the past week, holding a Momentum Score of A [10][11] - Albemarle Corporation (ALB) has risen by 67.2% in the last year but faced a 3.7% drop in the past week, also with a Momentum Score of A [11][12] - Alcoa Corporation (AA) has increased by 52% over the past year but saw an 8.5% decline in the past week, maintaining a Momentum Score of A [12]