Fundamental momentum measures how a company’s operational and financial performance improves over time through metrics like return on equity, operating margins, and other key indicators. Unlike price momentum, which only tracks stock price movements, fundamental momentum examines the actual business performance trends.
Research by Dashan Huang et al. on Twin Momentum revealed that companies with improving fundamentals typically outperform those that just have price momentum.
This concept is significant for investors because it identifies companies making genuine operational improvements rather than experiencing just temporary price gains. Consistent improvement in fundamental metrics often signals effective management, growing competitive advantages, or successful adaptation to market changes.
Huang discovered that combining fundamental and price momentum creates a more powerful investment strategy than either approach alone. This combination helps investors identify companies with both strong market performance and solid underlying business fundamentals, reducing the risk of investing in companies that are merely riding market sentiment without substantive operational improvements
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Here are the top 10 fundamentally sound high fundamental momentum stocks using our guru models as of March 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 | $173.36 | $2,092 | 13.2 | 2.0 | 66 | 4.2 | 12.5 | 0.6% | 1 |
| URBN | URBAN OUTFITTERS INC | $48.81 | $4,504 | 11.5 | 0.8 | 72 | 1.8 | 8.7 | 0.0% | 1 |
| CALM | CAL-MAINE FOODS INC | $83.03 | $4,072 | 6.5 | 1.3 | 85 | 2.0 | 5.7 | 3.5% | 1 |
| HRB | H & R BLOCK INC | $50.23 | $6,723 | 13.7 | 1.9 | 67 | 1.5 | 10.3 | 2.7% | 1 |
| HOG | HARLEY-DAVIDSON INC | $24.56 | $3,059 | 7.4 | 0.6 | 29 | 1.0 | 5.1 | 2.8% | 1 |
| AMPH | AMPHASTAR PHARMACEUTICALS INC | $26.66 | $1,270 | 8.7 | 1.7 | 30 | 1.7 | 5.9 | 0.0% | 1 |
| COKE | COCA-COLA CONSOLIDATED INC | $1,318.47 | $11,494 | 21.0 | 1.7 | 89 | 8.1 | 13.9 | 0.3% | 1 |
| NXPI | NXP SEMICONDUCTORS NV | $206.16 | $52,286 | 21.2 | 4.2 | 45 | 5.7 | 15.0 | 2.0% | 1 |
| PODD | INSULET CORP | $255.44 | $17,939 | 44.1 | 8.7 | 88 | 14.8 | 35.9 | 0.0% | 1 |
| BKNG | BOOKING HOLDINGS INC | $4,465.48 | $146,536 | 25.8 | 6.2 | 80 | 3.4 | 22.6 | 0.8% | 1 |
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