3 Momentum Stocks for Red-Hot Gains (Without Paying the CRA a Dime)

Tired of this crash? This trio of momentum stocks, including Wesdome Gold Mines (TSX:WDO), can provide the price strength you need.

| More on:
Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks

Image source: Getty Images.

Hi there, Fools! I’m back to quickly highlight three stocks trading at new 52-week highs. Why? Because after a given stock rallies over a short period, one of two things usually happens:

So if you’re a Tax-Free Savings Account (TFSA) momentum investor straining for good ideas amid the current market panic, this list is a good place to begin.

Golden opportunity

Leading off our list is gold producer Wesdome Gold Mines (TSX:WDO), which has rocketed 158% over the past year and currently trades near 52-week highs of $12 per share.

In addition to the obvious strength in the price of gold, Wesdome’s massive run over the past year has been fuelled by solid production and earnings growth. In the most recent quarter, revenue spiked 76% to $57.3 million as production increased 36% to 24,457 ounces.

More important is that Wesdome generated $16.7 million in free cash flow, resulting in a rock-solid cash position of $49.4 million.

“Despite these COVID-19-related delays, we are maintaining this year’s production guidance. Longer term, Wesdome’s plan of becoming an intermediate gold producer remains intact,” said CEO Duncan Middlemiss. “There have been some setbacks related to this pandemic, but we can still see becoming a 200,000-plus ounce producer in the medium term.”

Wesdome trades at a forward P/E of 15.

Absolute steal

Next up we have security software technologist Absolute Software (TSX:ABT), whose shares have risen 32% over the past year and currently trade near 52-week highs of $12.

After being walloped in March, Absolute shares have risen sharply in recent weeks, giving momentum investors plenty of positive vibes. Specifically, the company’s impressive scale (more than 12,000 customers worldwide), consistent growth rates, and sound fundamentals should continue to fuel strong long-term returns.

In the most recent quarter, EPS of $0.05 topped expectations as revenue improved 5% to $26 million.

“We continued to see steady growth, while exceeding our expectations on EBITDA in the third quarter,” said CEO Christy Wyatt. “Whether it’s hybrid remote work or the evolution of learning environments, there’s never been a more critical time for the undeletable endpoint defense that only Absolute can provide.”

Absolute shares currently trade at a forward P/E in the high-40s and offer a dividend yield of 2.9%.

Exchange rate

Rounding out our list is Toronto Stock Exchange operator TMX Group (TSX: X), which is up about 45% over the past year and currently trades near 52-week highs of $139 per share.

TMX Group has held up quite well during this current downturn, suggesting that it remains an effective way to play defense. Specifically, TMX’s cost efficiencies, asset-light business model, and sound fundamentals should continue to fuel strong price gains over the long run.

In the most recent quarter, EPS improved 14% as revenue increased 12% to $220 million. More important, operating cash flow jumped 50% to $52.5 million.

“TMX achieved strong earnings growth in the first quarter of 2020 compared to the first three months of 2019, reflecting high volatility and a surge in activity as markets reacted to the COVID19 pandemic,” said CEO John McKenzie.

TMX shares offer a decent dividend yield of 2.0%.

The bottom line

There you have it, Fools: three red-hot momentum stocks worth checking out.

As always, they aren’t formal recommendations. Instead, look at them as a starting point for further research. Momentum stocks are especially fickle, so plenty of your own due diligence is required.

Fool on.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends TMX GROUP INC. / GROUPE TMX INC.

More on Investing

Canadian Dollars
Stock Market

Where to Invest $5,000 in April 2024

Do you have some extra cash to spare? Here are five companies to invest $5,000 in next month.

Read more »

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

tsx today
Stock Market

TSX Today: Why Record-Breaking Rally Could Extend on Thursday, March 28

The main TSX index closed above the 22,000 level for the first time yesterday and remains on track to post…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »