After back-to-back standout years, the S&P 500 is well-poised to gain further in 2025, banking on Donald Trump’s pro-growth initiatives, the Federal Reserve’s moderate interest rate policies and a resilient U.S. economy. 

In 2024, the S&P 500 jumped more than 20% for the second consecutive year. With further gains anticipated, investors should seize the bullish trend by investing in strong S&P 500 momentum stocks. Investors should apply the investment strategy of Richard Driehaus, better known as the “buy high and sell higher” theory.

To that end, stocks like NVIDIA Corporation NVDA, Brown & Brown, Inc. BRO and Chipotle Mexican Grill, Inc. CMG have been selected as the momentum picks for 2025 using the Driehaus strategy.

A Detailed Look Into the Driehaus Strategy

Regarding the strategy, Driehaus once said: “I would much rather invest in a stock that’s increasing in price and take the risk that it may begin to decline than invest in a stock that’s already in decline and try to guess when it will turn around.” In line with this insight, the American Association of Individual Investors (“AAII”) considered the percentage 50-day moving average as one of the key criteria before creating a portfolio following Driehaus’ philosophy.

It is calculated by dividing the numerator (month-end price minus 50-day moving average of month-end price) by the 50-day moving average of the month-end price. Another momentum indicator — positive relative strength — has also been included in this strategy. A positive percentage 50-day moving average indicates that the stock is trading at a price higher than its 50-day moving average level, indicating an uptrend.

Moreover, AAII found that Driehaus primarily focuses on strong earnings growth rates and impressive earnings projections to pick potential outperformers. This strategy, which was designed to provide better returns over the long term, also prioritizes companies with a strong history of beating estimates.

Screening Parameters Using Research Wizard

To make the strategy more profitable, we have considered only those stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Momentum Score of A or B. Our research shows that stocks with a Style Score of A or B, combined with a Zacks Rank #1 or 2, offer the best upside potential.

• Zacks Rank less than or equal to #2

Whether the market is good or bad, stocks with a Zacks Rank #1 or 2 have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.

• Last 5-year average EPS growth rates above 2%

Strong EPS growth history ensures improving business

• Trailing 12-month EPS growth greater than 0 and industry median

Higher EPS growth compared to the industry average indicates superior earnings performance

• Last four-quarter average EPS surprise greater than 5%

Solid EPS surprise history indicates better price performance

• Positive percentage change in 50-day moving average and relative strength over 4 weeks

Positive percentage change in 50-day moving average and relative strength signal uptrend

• Momentum Score equal to or less than B         

A favorable momentum score indicates that it is ideal for taking advantage of the momentum with the highest probability of success.

These few parameters have narrowed the universe of over 7,743 stocks to only 47.

Here are the top three of the 47 stocks:

NVIDIA 

NVIDIA offers graphics, computing and networking solutions. It has a Zacks Rank #2 and a Momentum Score of A. The trailing four-quarter earnings surprise for NVDA is 9.8%, on average (read more: NVIDIA is the Top 2025 Magnificent 7 Stock Pick - Find Out Why).

Brown & Brown

Brown & Brown markets and sells insurance products and services. It has a Zacks Rank #2 and a Momentum Score of B. The trailing four-quarter earnings surprise for BRO is 6.9%, on average.

Chipotle Mexican Grill

Chipotle Mexican Grill operates quick-casual and fresh Mexican food restaurant chains. It has a Zacks Rank #2 and a Momentum Score of B. The trailing four-quarter earnings surprise for CMG is 9.8%, on average.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

 

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