Just as a surfer waits for the perfect swell, investors revel in the thrill of hitting “Buy” and watching their investments soar. This is the essence of momentum investing: identifying a rising wave and riding it until it fades. Unlike traditional strategies focused on “value” or “growth,” momentum investing is all about price movement. The key is that a stock is moving up and staying up.
In our latest analysis, we have identified six ASX-listed companies showing strong momentum across large, mid, and small-cap stocks using a straightforward screening process based on five critical signals.
Momentum Screening: The Five-Part Test
Our approach to identifying momentum stocks involves a five-part screen:
- Positive six-month price change: The stock price must have increased over the past six months.
- Outperforming the ASX 200/Small Ords: The stock must have outperformed the index in the previous six months.
- Above the 50-day moving average: Ensures the short-term upward trend remains intact.
- Not overbought: The Relative Strength Indicator (RSI) must not exceed 70, indicating that the stock is not overbought.
- Bullish Trading Central view: The stock must have a “bullish” or “rising prices” rating from this independent research provider.
Passing all five tests indicates clear momentum: the stock’s price is rising, it is outperforming the market, has technical support, and an independent firm has a positive outlook.
Large Cap Leaders: Charter Hall Group and JB Hi-Fi
Charter Hall Group (ASX: CHC)
Charter Hall Group, a leading diversified property investment and funds management company, manages nearly $85 billion in funds. As a commercial landlord with 1,600 properties, including iconic buildings like No. 1 Martin Place in Sydney, Charter Hall tops our large-cap screen, outperforming the ASX by nearly 30%.
RSI: 57 | Key Resistance: $21.80 | Potential Targets: $24.20, $25.70
Qualitative insights reveal that Charter Hall benefits from growing land and property values, increased demand for office spaces, and potential interest rate cuts.
JB Hi-Fi (ASX: JBH)
Australia’s largest home entertainment retailer, JB Hi-Fi, boasts over 300 stores and has shown impressive long-term performance, outperforming the ASX by over 25% in the past six months.
RSI: 51 | Pivot Point: $110.92 | Next Target: $123.63
JB Hi-Fi has capitalized on consumer demand for electronics, rising incomes, and Australia’s growing population.
Mid Cap Momentum: Catapult Sports and Lovisa Holdings
Catapult Sports (ASX: CAT)
Catapult Sports, a global leader in sports data and analytics, serves over 4,600 teams across 100 countries. Its stock has soared more than 93% in the past six months, significantly outperforming the ASX 200.
RSI: 65 | Support Level: $6.33 | Alternative Scenario: Drop to $5.90, $5.65
Catapult’s strong results in the latest earnings season, with 19% revenue growth and a record EBITDA margin, underscore its momentum.
Lovisa Holdings (ASX: LOV)
Founded in Sydney in 2010, Lovisa has rapidly expanded into the fashion accessories market with over 1,000 stores worldwide. The company has outperformed the ASX 200 by nearly 50%.
RSI: 53 | Support Level: $37.17 | Potential Rally: $42.74
Lovisa’s strong start to the new fiscal year, with comparable sales up more than 5%, highlights its ongoing success.
Small Cap Standouts: Motorcycle Holdings and Cedar Woods Properties
Motorcycle Holdings (ASX: MTO)
Motorcycle Holdings, a leading retailer and distributor of motorcycles and accessories, has seen its stock surge 111% over the past six months, outpacing the Small Ordinaries Index.
RSI: 50 | Key Levels: $3.89, $4.01 | Downside Risk: $2.96
The company achieved record results in FY25, with sales revenue of $650 million and a 27.7% growth in after-tax profit.
Cedar Woods Properties (ASX: CWP)
Established in 1987, Cedar Woods is a diversified property company that has outperformed the Small Ordinaries by nearly 37% in the past six months.
RSI: 14 | Support Level: $7.30 | Potential Rally: Beyond $8
Cedar Woods benefits from surging housing demand, reporting a net profit after tax of $48.1 million for FY25, up 18.9% year-on-year.
Final Thoughts: The Nature of Momentum Investing
While technical analysis offers valuable insights, it is not infallible. The market can change rapidly, much like ocean waves. For those using momentum trading, it is crucial to stay vigilant and manage risks with tools like stop and limit orders.
We hope this analysis has provided valuable insights into stocks currently exhibiting strong momentum. For further content and different indicators, feel free to share your thoughts in the comments below.
