Earnings Momentum Stocks (NASDAQ:AAPL),(NYSE:IBM),(NASDAQ:AMZN)

Earnings momentum occurs when a company continues to show accelerating earnings growth over time.  This is often a long-term sign that a company's future is bright due to the increased demand for their goods and services.

Let’s analyze a few stocks using the following minimum criteria:

• Next quarter earnings consensus has increased within past four weeks.
• Earnings consensus for next year also increased within past four weeks.
• The average earnings surprise over the last year is positive (meaning the company has come up with more surprises than disappointments).
• The earnings surprise last quarter must be in the top half of the company’s industry.
• The three-year earnings growth greater than 15% annually.
• One-year earnings growth has to be positive.  (Face it, the economy has been tough, so a positive earnings growth over the last year is a good sign for a company.)

Based on this, we have identified some strong stocks:

Apple Inc. (NASDAQ:AAPL) has obviously release some new products are sure to gain some market share (hint: iPad).  The stock chart has shown strength the past 9 months, going from $120 a share to over $200.  Share price for Apple has been faltering a bit with the recent drop in the overall market, so it might be a good time to pick up some shares as the market will stabilize and the iPad can take effect.

Shares of International Business Machines Corp. (NYSE:IBM) have likewise dropped significantly, but looking at the chart, we see the stock price is at trend line support near the current price of $122, and just below that is strong horizontal support at the $120 level which was where the stock broke out of back in Oct/Nov of 2009.

Shares of Amazon.com, Inc. (NASDAQ:AMZN) are up sharply today on news of an upgrade from BWS Financial as they changed their outlook from Sell to Strong Buy.  The interesting thing about the stock chart for Amazon is that the price recently tested the $120 support level established after the gap up back in October, and it performed as any technical analyst would expect…  It bounced off $120 and is currently trading  at $129.

Disclosure: No positions.