June 14, 2024

Brad Marolf

Business & Finance Wonders

Top Stocks for July 2023

Top U.S. stocks for July include Applied Digital Inc. (APLD), TG Therapeutics Inc. (TGTX), and Immunovant Inc. (IMVT). The share prices of all three have more than quintupled in the past year, as the Russell 3000, a capitalization-weighted stock market index used as a benchmark for the entire U.S. stock market, has returned about 14%.

Below, we list the top five stocks in each category: value, growth, and momentum. All data below is as of June 23.

Best Value Stocks

Value investing is a factor-based investing strategy that involves picking stocks you believe are trading for less than what they are intrinsically worth, usually measured by the ratio of the stock’s price to one or more fundamental business metrics. A widely accepted value metric is the price-to-earnings (P/E) ratio.

Value investors say that if a business is cheap compared with its intrinsic value (as measured by its P/E ratio, in this case), then the stock price may rise faster than others as the price comes back in line with the worth of the company. These are among the stocks with the lowest 12-month trailing P/E ratio.

Best Value Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Vital Energy Inc. (VTLE) 42.21 0.8 0.9
Theravance Biopharma Inc. (TBPH) 10.81 0.6 0.9
Southwestern Energy Co. (SWN) 5.50 6.1 0.9
SilverBow Resources Inc. (SBOW) 26.42 0.6 1.1
Jackson Financial Inc. (JXN) 29.15 2.4 1.2

Source: YCharts

  • Vital Energy Inc: An oil and natural gas exploration and development company focused on the Permian Basin in West Texas. Formerly known as Laredo Petroleum Inc., the company changed its name to Vital Energy in January 2023. Vital shares have plunged by more than 46% in the last year amid declining earnings.
  • Theravance Biopharma Inc.: This is a biopharmaceutical company in the Cayman Islands that develops and manufactures respiratory medicines such as Yupelri and Trelergy to treat chronic obstructive pulmonary disease (COPD).
  • Southwestern Energy Co.: An oil and natural gas explorer and producer with properties in Pennsylvania, Ohio, West Virginia, and Louisiana. In June 2022, the company authorized a $1 billion share repurchase program that can continue through the end of 2023. Southwestern Energy stock has fallen by more than 23% in the last year as analysts have revised earnings and revenue forecasts downward.
  • SilverBow Resources Inc.: This is an oil and gas company that produces petroleum products in southern Texas. In 2022 the company acquired Sundance Energy and Sandpoint Resources, Texas-based oil exploration companies. These acquisitions have added hundreds of drilling locations to the company’s portfolio, contributing to an 8% year-over-year increase in oil and gas sales for the first quarter of 2023.
  • Jackson Financial Inc.: Jackson Financial provides a diverse range of annuity products to U.S. clients. The company’s annuity retail operating earnings fell to $356 million in the latest quarter from $425 million in the prior year as a result of declining equity prices and lower spread income due to variable-rate annuities.

Fastest-Growing Stocks

These are the top stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-on-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth.

Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.

Fastest-Growing Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
CTI BioPharma Corp. (CTIC) 9.09 1.2 N/A (see company description) 950.8
Mirati Therapeutics Inc. (MRTX) 38.02 2.2 N/A (see company description) 910.9
Ellington Financial Inc. (EFC) 13.53 0.9 N/A (see company description) 910.7
Vertex Energy Inc. (VTNR) 5.36 0.4 N/A (see company description) 827.2
Rivian Automotive Inc. (RIVN) 14.15 13.3 N/A (see company description) 595.8

Source: YCharts

  • CTI BioPharma Corp.: A pharmaceutical company that develops treatments for blood-related cancers. On May 10, Swedish Orphan Biovitrum AB (SOBI), a biotechnology company based in Sweden, announced the acquisition of CTI BioPharma. SOBI will acquire CTI in an all-cash transaction for $9.10 per share, or approximately $1.7 billion. Following this news, CTI’s share price rallied by 89% to $9.09 from $4.82 per share. Note that CTI BioPharma doesn’t have an EPS growth figure in the table above because the company reported a loss per share in the most recent quarter.
  • Mirati Therapeutics Inc.: A biotechnology company that develops novel medications for the treatment of cancer. The company’s flagship medication is Krazati, which treats metastatic non-small cell lung cancer. Mirati Therapeutics doesn’t have an EPS growth figure in the table above because the company reported a loss per share in the most recent quarter.
  • Ellington Financial Inc.: This company manages mortgage-backed securities (MBS) and other financial assets. On May 30, it announced a merger agreement through which Ellington Financial will acquire Arlington Asset Investment Corp. (AAIC), a mortgage-related real estate investment trust (REIT). The expected market capitalization for the combined company will be approximately $1.5 billion. Note that Ellington Financial doesn’t have an EPS growth figure in the table above because the company reported a loss per share in the first quarter of 2022.
  • Vertex Energy Inc.: It engages in oil refining and distribution. Note that Vertex Energy doesn’t have an EPS growth figure in the table above because the company reported a loss per share in the first quarter of 2022.
  • Rivian Automotive Inc.: This is an electric vehicle manufacturer that produces SUVs, trucks, and delivery vans. Rivian Automotive doesn’t have an EPS growth figure in the table above because the company reported a loss per share in the most recent quarter.

Stocks With the Most Momentum

Momentum investing is a factor-based investing strategy that involves buying a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform won’t suddenly disappear. In addition, other investors seeking to benefit from the stock’s outperformance will often purchase it, further bidding up its price.

These are the stocks that had the highest total return over the past 12 months.

Stocks With the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Applied Digital Corp. (APLD) 9.67 0.9 705.8
TG Therapeutics Inc. (TGTX) 23.71 3.5 440.1
Immunovant Inc. (IMVT) 20.50 2.7 439.5
Super Micro Computer Inc. (SMCI) 226.46 11.9 422.0
Akero Therapeutics Inc. (AKRO) 52.01 2.9 375.8
Russell 3000 Index N/A N/A 13.7

Source: YCharts

  • Applied Digital: This company builds and operates data centers to power blockchain infrastructure and cryptocurrency mining in North America. The company’s shares surged in mid-May on news that it had entered a $180 million agreement to provide artificial intelligence (AI) cloud services to an undisclosed customer.
  • TG Therapeutics: A biopharmaceutical company that focuses on producing medications to treat diseases such as multiple sclerosis. Shares of TG Therapeutics rallied in the spring after its announcement of positive news regarding potential European approval of its drug BRIUMVI for the treatment of adult patients with relapsing forms of multiple sclerosis.
  • Immunovant: This is a biopharmaceutical firm that creates and markets drugs for the treatment of autoimmune conditions. Immunovant stock rallied last fall after the company announced it would issue 12.5 million new shares to generate $75 million in gross proceeds.
  • Super Micro Computer Inc.: Super Micro Computer, or Supermicro, manufactures energy-efficient servers and storage systems and provides worldwide support services. Supermicro shares jumped in recent months as it has become a leading server provider for AI platforms.
  • Akero Therapeutics: This is a clinical-stage pharmaceutical company that develops treatments for non-alcoholic steatohepatitis (NASH). On June 5, the company announced that its Phase 2b study of efruxifermin (EFX) met safety and tolerability protocols while improving patient outcomes when combined with a GLP-1 receptor agonist.

Top-Stock Investing Advantages

To become a top stock, a company most likely produces positive trends in its earnings, revenue, and share price. Momentum in these areas indicates a well-run business that has the potential to keep generating profit and creating shareholder value.

Investors can use free stock-screening sites like Finviz to find top stocks, filtering by both fundamental and technical metrics. For example, a trader could find a top stock by scanning for companies that are trading at a new 52-week high or that have reported higher earnings consistently over the past five years.

Liquidity

Top stocks typically receive extensive media coverage and are followed by leading Wall Street analysts. This usually means more liquidity, leading to better prices and faster trade executions. Moreover, top stocks with ample liquidity are more difficult for larger players to manipulate, helping to keep a fair and orderly market in them.

Portfolio Diversification

Because investors can choose to look at top stocks using a wide variety of metrics, it’s possible to invest in leading companies across a diverse set of industries and sectors. This can contribute to a broadly diversified portfolio, which may offer protection against sector-specific risks.

Top-Stock Investing Risks

Missed Opportunities

Investing only in top large-cap stocks means that investors may miss profitable opportunities in other areas of the stock market. Some of the most significant gains come from small-cap stocks that currently are under the radar. For example, an unknown small biotechnology company may announce a breakthrough discovery that propels its share price higher. Even if investors favor trading top stocks, allocating a portion of capital to other stock groups helps avoid missing compelling opportunities.

Trend Reversals

The trend is your friend—until it’s not. Even top large-cap stocks with a track record of earnings growth and creating shareholder value encounter unforeseen challenges. For example, cruise line companies, such as Carnival Corp. (CCL) and Norwegian Cruise Line Holdings Ltd. (NCLH), reported increased revenue in the years leading up to the pandemic but watched their top line sink to unprecedented lows for several years due to no-sail orders and a collapse in passenger demand during the worldwide health crisis.

When investing in top stocks, investors should always use a stop-loss order to protect against sudden trend reversals.

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As of the date this article was written, the author does not own any of the above stocks.

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