Here's Why Carvana (CVNA) is a Great Momentum Stock to Buy

Zacks Investment Research identifies Carvana (CVNA) as a strong momentum stock, with a Momentum Style Score of B and a Zacks Rank of #1 (Strong Buy). CVNA's stock has significantly outperformed both its industry and the S&P 500 over the past week, month, quarter, and year, with a 212.19% increase in the last year alone; additionally, earnings estimates for the current and next fiscal year have been revised upwards, suggesting continued positive momentum.

Analysis

Carvana (CVNA) is highlighted as a strong momentum investment, evidenced by its Zacks Rank #1 (Strong Buy) and a Momentum Style Score of B. The company's stock has demonstrated significant outperformance relative to both its industry and the broader market. Specifically, CVNA shares appreciated 1.41% over the past week while the Zacks Internet - Commerce industry remained flat, and its monthly price change of 26.91% substantially exceeded the industry's 7.67% gain. Over the past quarter, Carvana's shares surged 71.07% against the S&P 500's 0.42% decline, and year-over-year, CVNA shares are up 212.19%, compared to the S&P 500's 13.57% increase. This price momentum is accompanied by an average 20-day trading volume of 4,037,623 shares. Furthermore, CVNA's earnings outlook has strengthened, with four upward earnings estimate revisions for the full year in the past two months and no downward revisions, contributing to a consensus estimate increase from $3.52 to $4.64. For the next fiscal year, six estimates have been revised upwards with no concurrent downward revisions, reinforcing the positive sentiment.

Key Decisions for Investors

• Given Carvana's Zacks Rank #1 (Strong Buy), B Momentum Style Score, and substantial price outperformance (e.g., 212.19% year-over-year), investors utilizing momentum-based strategies may consider CVNA for potential near-term gains.
• The positive trend in earnings estimate revisions, highlighted by the full-year consensus estimate increasing from $3.52 to $4.64, offers fundamental support to the stock's observed momentum and should be continually monitored.
• Investors should acknowledge the 'buying high, hoping to sell even higher' nature of momentum investing and assess if CVNA's current trajectory and associated volatility align with their risk tolerance, particularly noting Zacks' research suggesting short-term outperformance for stocks with these combined ratings.