When examining what truly drives long-term investment success, the steady progression of a company’s operational excellence—its “fundamental momentum”—deserves particular attention. This concept encourages investors to look beyond simple stock price fluctuations and instead track meaningful business improvements through essential performance metrics like operating margins, return on invested capital, and return on equity.
The groundbreaking Twin Momentum research conducted by Dashan Huang and colleagues demonstrated that businesses showing consistent improvement in their fundamental metrics tend to deliver superior returns compared to those merely experiencing price appreciation. This research highlights the crucial distinction between companies making genuine operational progress and those simply benefiting from temporary market enthusiasm.
Why does this perspective matter for serious investors? Because fundamental momentum helps identify companies making substantive operational improvements rather than those experiencing fleeting market popularity. When a business consistently enhances its core performance indicators quarter after quarter, it often signals effective leadership, expanding competitive advantages, or successful strategic pivots—all factors that contribute to sustainable long-term value creation.
Perhaps most valuable is Huang’s discovery that integrating both fundamental and price momentum creates a more robust investment approach than either method independently. This dual strategy enables investors to target companies exhibiting strong market performance underpinned by genuine business improvements. By focusing on this intersection, investors can minimize exposure to enterprises temporarily buoyed by market sentiment without meaningful operational advancement, while simultaneously identifying businesses whose improving fundamentals may soon be recognized by the broader market.
For the discerning investor, tracking fundamental momentum provides a powerful lens through which to evaluate potential investments, one that emphasizes substance over short-term market noise and helps build a portfolio of companies demonstrating real progress in their business operations.
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Here are the top 10 fundamentally sound high fundamental momentum stocks using our guru models as of May of 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 | $194.88 | $2,352 | 13.7 | 2.2 | 76 | 4.3 | 13.0 | 0.6% | 1 |
| URBN | URBAN OUTFITTERS INC | $59.33 | $5,498 | 13.9 | 1.0 | 85 | 2.2 | 10.6 | 0.0% | 1 |
| CALM | CAL-MAINE FOODS INC | $93.95 | $4,556 | 4.6 | 1.2 | 90 | 1.9 | 4.2 | 4.6% | 1 |
| HRB | H & R BLOCK INC | $56.95 | $7,624 | 13.9 | 2.1 | 66 | 84.2 | 11.1 | 2.4% | 1 |
| HOG | HARLEY-DAVIDSON INC | $25.00 | $3,037 | 9.3 | 0.6 | 34 | 1.0 | 6.0 | 2.8% | 1 |
| AMPH | AMPHASTAR PHARMACEUTICALS INC | $23.88 | $1,126 | 8.7 | 1.5 | 27 | 1.5 | 5.6 | 0.0% | 1 |
| COKE | COCA-COLA CONSOLIDATED INC | $1,151.26 | $10,036 | 20.0 | 1.5 | 76 | 6.7 | 13.0 | 0.5% | 1 |
| NXPI | NXP SEMICONDUCTORS NV | $212.40 | $53,658 | 23.1 | 4.4 | 41 | 5.8 | 16.2 | 1.9% | 1 |
| PODD | INSULET CORP | $314.46 | $22,130 | 56.6 | 10.1 | 93 | 16.6 | 45.5 | 0.0% | 1 |
| BKNG | BOOKING HOLDINGS INC | $5,262.42 | $171,241 | 32.7 | 7.1 | 85 | 28.3 | 0.7% | 1 |
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