Fundamental momentum tracks a company’s improving operational and financial performance over time using metrics like ROE, operating margins, and other key indicators. Unlike price momentum which follows stock price changes, fundamental momentum examines the actual business performance trends.
Huang’s Twin Momentum research found that companies with improving fundamentals typically outperform those with declining fundamentals.
This concept matters to investors because it identifies companies making genuine operational improvements rather than just experiencing temporary price gains. Consistent improvement in fundamental metrics often indicates effective management, growing competitive advantages, or successful market adaptation.
Huang found that combining fundamental and price momentum creates a stronger investment strategy than either approach alone. This combination helps investors find companies with both market performance and underlying business strength, reducing the risk of investing in companies merely riding market sentiment without real operational improvements.
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Here are the top 10 most fundamentally sound high fundamental momentum stocks using our guru models as of February 2025.
| Ticker | Company Name | Price | Market Cap ($mil) | PE Ratio | Price/ Sales | Relative Strength | Price/ Book | Price/ Cash Flow | Dividend Yield | Fundamental Momentum Percentile |
|---|---|---|---|---|---|---|---|---|---|---|
| POWL | POWELL INDUSTRIES INC | $177.25 | $2,138 | 13.5 | 2.0 | 68 | 4.3 | 12.8 | 0.6% | 1 |
| CALM | CAL-MAINE FOODS INC | $91.04 | $4,464 | 7.1 | 1.5 | 87 | 2.2 | 6.3 | 3.2% | 1 |
| HRB | H & R BLOCK INC | $52.27 | $6,996 | 14.3 | 1.9 | 65 | 1.5 | 10.7 | 2.6% | 1 |
| HOG | HARLEY-DAVIDSON INC | $26.42 | $3,364 | 7.9 | 0.7 | 33 | 1.1 | 4.9 | 2.6% | 1 |
| COKE | COCA-COLA CONSOLIDATED INC | $1,382.86 | $12,055 | 22.0 | 1.8 | 89 | 8.5 | 14.6 | 0.3% | 1 |
| NXPI | NXP SEMICONDUCTORS NV | $236.52 | $59,986 | 24.3 | 4.8 | 52 | 6.6 | 17.2 | 1.7% | 1 |
| PODD | INSULET CORP | $282.80 | $19,837 | 48.8 | 9.6 | 84 | 16.4 | 39.8 | 0.0% | 1 |
| BKNG | BOOKING HOLDINGS INC | $4,990.64 | $163,769 | 28.8 | 6.9 | 77 | 3.4 | 25.3 | 0.7% | 1 |
| HWM | HOWMET AEROSPACE INC | $129.83 | $52,584 | 46.2 | 7.1 | 11.7 | 36.8 | 0.2% | 1 | |
| URBN | URBAN OUTFITTERS INC | $52.80 | $4,872 | 15.1 | 0.9 | 72 | 2.1 | 11.0 | 0.0% | 1 |
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