Even as the S & P 500 hits a fresh record close, there are still opportunities to find momentum stocks with high free cash flow yield and room to grow, according to Piper Sandler. Wednesday was a huge day for the three major averages, with the S & P 500, Nasdaq Composite and Dow Jones Industrial Average closing at records after the Federal Reserve indicated that three rate cuts are still in the cards for 2024.
"Free cash flow yield is a factor that marries quality with valuation. This factor tends to work throughout the majority of the cycle and is one of the top-performing factors throughout the decades," he wrote. In a Tuesday note, Kantrowitz shared a basket of stocks in the S & P 1500 that are in the top quintile for both momentum and free cash flow yield.