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

U.S. equities concluded a stellar Q2 2025, with the S&P 500 gaining 10.6% and the Nasdaq 17.8%, propelled by receding recession concerns, anticipated trade deals, and expectations of two Fed rate cuts. This positive market sentiment underpins five momentum picks for Q3 2025: Jabil (JBL) due to AI demand and cash flow strength; Newmont (NEM) benefiting from the Newcrest acquisition and project progress; HEICO (HEI) driven by increased air travel and defense spending; Rockwell Automation (ROK) via portfolio expansion and cloud investments; and The Estée Lauder Companies (EL) focused on profit recovery and digital growth.

Analysis

The U.S. equity market is positioned with strong momentum entering the third quarter of 2025, following a stellar second quarter where the S&P 500 and Nasdaq Composite gained 10.6% and 17.8%, respectively. This rally is supported by favorable macroeconomic signals, including receding recession fears and a Federal Reserve outlook anticipating two additional rate cuts within the year. Against this backdrop, several companies with distinct fundamental catalysts are highlighted. Jabil (JBL) stands out with direct exposure to the AI infrastructure boom, projecting 18.5% earnings growth for its next fiscal year, further supported by a significant 9% upward revision in consensus estimates over the past 30 days. In the aerospace and defense sector, HEICO (HEI) is benefiting from dual tailwinds: resurgent air travel and a proposed 13% increase in the U.S. defense budget, which underpins its forecasted 13.2% revenue and 23.4% earnings growth for the current year. Newmont (NEM) is advancing its growth through the integration of its Newcrest acquisition and the progression of its Ahafo North project, targeting 24.1% earnings growth this year. Meanwhile, Rockwell Automation (ROK) is navigating lower sales volumes by implementing price increases, relying on its strong balance sheet and digital transformation initiatives. Lastly, The Estée Lauder Companies (EL) presents a turnaround case, with a profit recovery plan expected to drive a 45.4% surge in current-year earnings, although this is based on margin restoration rather than significant top-line growth, which is projected at a modest 1.2%.

Key Decisions for Investors

• Given the bullish market backdrop fueled by anticipated Fed rate cuts, investors could consider overweighting momentum stocks with strong secular tailwinds in sectors like AI, defense, and industrial automation.
• Jabil (JBL) appears to be a primary candidate for a long position due to its high earnings growth forecast of 18.5%, significant positive earnings estimate revisions, and strategic diversification which mitigates single-product risk.
• For investors evaluating turnaround opportunities, The Estée Lauder Companies (EL) offers substantial near-term earnings growth potential of 45.4%, but this should be weighed against its low projected revenue growth of 1.2%, indicating the recovery is primarily margin-driven.
• While Rockwell Automation (ROK) is presented as a pick, investors should closely monitor its ability to sustain growth through price hikes, as the mention of lower sales volumes across all segments introduces a key risk factor to its outlook.