5 Momentum Picks for Third-Quarter 2025 After a Stellar Second Quarter

U.S. equities closed Q2 2025 at record highs, with the S&P 500 gaining 10.6% and the Nasdaq Composite surging 17.8%, marking the best quarter in the past year. This rally was driven by receding recession concerns, expectations of new trade deals, and the Federal Reserve indicating two more benchmark lending rate cuts in the second half of the year. Amidst this bullish sentiment, the article highlights five Zacks Rank #1 (Strong Buy) stocks with strong momentum—Jabil, Newmont, HEICO, Rockwell Automation, and The Estée Lauder Companies—as prudent investments for the third quarter.

Analysis

U.S. equity markets concluded the second quarter of 2025 at record highs, marking the strongest quarterly performance in a year, with the Nasdaq Composite surging 17.8% and the S&P 500 gaining 10.6%. This rally is underpinned by a confluence of positive macroeconomic signals, including dissipating fears of a near-term recession, expectations of key trade deals, and a dovish Federal Reserve outlook indicating two further rate cuts in the latter half of the year. Against this backdrop, several companies with strong momentum are positioned to capitalize on specific secular and cyclical trends. Jabil (JBL) is benefiting from demand in AI-powered data centers and cloud infrastructure, with analysts revising next-year's earnings estimates up by 9% and forecasting 18.5% EPS growth. HEICO (HEI) is exposed to dual tailwinds from rising commercial air travel and a proposed 13% increase in the U.S. defense budget, supporting projected current-year earnings growth of 23.4%. In the industrial sector, Rockwell Automation (ROK) is leveraging digital transformation and cloud investments to drive growth, with price increases expected to offset lower volumes. Meanwhile, The Estée Lauder Companies (EL) is executing a turnaround strategy focused on profitability, with its strong digital presence expected to fuel a significant 45.4% earnings growth for the current fiscal year. Lastly, Newmont Corp. (NEM) is advancing its growth through key mining projects and synergies from the Newcrest acquisition, targeting 24.1% earnings growth for the current year.

Key Decisions for Investors

• Given the bullish market sentiment driven by dovish Fed policy and receding recession risk, investors may consider overweighting exposure to U.S. equities, particularly momentum stocks with strong earnings growth profiles.
• The five highlighted stocks—JBL, NEM, HEI, ROK, and EL—present distinct, catalyst-driven opportunities and warrant further due diligence for inclusion in growth-focused portfolios, based on their strong earnings forecasts and positive analyst estimate revisions.
• Monitor key external catalysts tied to these specific theses, including AI infrastructure spending for Jabil, U.S. defense budget allocations for HEICO, and progress on Estée Lauder's profit recovery plan.
• While the outlook is positive, positions should be managed with an eye on the materialization of anticipated trade deals and the Federal Reserve's actual rate-cutting path, as these factors are critical to sustaining current market valuation levels.