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Investing rules are made to be broken. It's not that we want to be rebels for the sake of disagreeing with the big shots on Wall Street, but when the market changes, we have to change with it.
We've all heard about the two most popular investing strategies: growth and value investing. Growth stocks, with their potential for revenue increases, offer investors the chance at huge gains as these hyped-up companies soar. Then there are value stocks, which are trading for less than what they're really worth. When the market catches up, their share prices can surge.
But now, new research shows that both of these groups actually cheat investors out of returns in the current market. A third, less hyped-up strategy is beating both value and growth investing.
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Quality stocks, regardless of other classification, are the stocks with upside momentum, and they are leading this market right now. Quality stocks are in companies with high return on equity, stable earnings growth, and low debt. This might not sound like the most exciting group of stocks, but they are actually the biggest winners.
New research shows that high-quality stocks are now most closely tracking the momentum stocks that typically lead the market higher.
Take a look at this chart showing just how closely quality stocks track with momentum.
While you might expect growth stocks to lead the way, quality stocks' dominance makes sense.
Investors are quick to sell lower-quality shares in times of turmoil. And with the China trade deal on-again and off-again, we've had plenty of that.
This relationship began before the tariff battle began, too. In fact, the trend toward investing in quality began in 2018, when the market first peaked and then settled into the choppiness we saw most of the year.
That's not really a surprise. Investors feel safer with companies that show strong financial results coupled with a low debt load.
With another sell-off underway as investors look for safer assets like bonds, we expect to see quality stocks continue their market leadership.
And that's why we're going to show you the best one to buy today.
This company's sterling balance sheet checks all the boxes for making it the perfect quality stock.
Plus, it has a top Money Morning Stock VQScore™, placing it squarely in the "Buy Zone."