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Practical Advice from

7 Momentum Stocks for High-Risk Appetites

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One of the best momentum stocks to buy of 2018 recently got a rude awakening from an analyst. On July 20, Credit Suisse analyst Judah Former downgraded discount retailer Five Below (FIVE) to “neutral” from “outperform” after its stock gained more than 125% over the past year.

“[Five Below] remains one of the most differentiated concepts in retail … and operates the quickest new store return model we have seen,” Frommer wrote in a note to clients. “That said, we see risk/reward as balanced at these levels given the stock’s material outperformance.”

There are two schools of thought when it comes to momentum stocks to buy and sell. The first philosophy is never begrudging a profit. The second is always let your winners run and cut your losses quickly. Which one is correct?

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They both depend on your investment psychology. If you’re averse to risk, the first school of thought will serve you better. If you’ve got a no risk, no reward personality, however, you’ll find comfort exercising the second philosophy. The one thing you shouldn’t do is use both. Commit to one and stick with it through the good times and bad. If you’ve done your homework, the odds are good you’ll do well over the long run.

For the purposes of this article, I’m recommending seven momentum stocks to buy with market caps greater than $2 billion that are up more than 100% over the past year … and Five Below could be on the list. If you follow the first philosophy, you’re welcome to read along, but I don’t recommend you take a bite out of any of these given your temperament. You’ll thank me later.

SEE ALSO FROM KIPLINGER: 10 Ways to Play the Next Bull Market With Emerging-Markets Stocks

Prices and data are from the original InvestorPlace story published on Jul. 27. Click on ticker-symbol links in each slide for current prices and more.

This slide show is from InvestorPlace, not the Kiplinger editorial staff.

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