Finding Momentum Stocks With Real Growth Catalysts: Why December Matters for Tech Investors

The market’s AI-driven recovery that accelerated into December reveals a critical insight for stock pickers: timing your entry into momentum plays matters less than identifying which companies have genuine catalysts backing their performance. After recent volatility tested conviction, institutional money returned to growth names with real earnings acceleration—a signal that disciplined screening beats emotional trading.

The Case for Sanmina: Why One Tech Manufacturer Shows What Momentum Actually Looks Like

Sanmina Corporation (SANM) exemplifies the kind of momentum stock that deserves attention right now. This integrated manufacturing solutions provider, which serves OEMs across communications, medical, automotive, and cloud infrastructure, just completed a transformational acquisition. The company’s purchase of ZT Systems’ data center infrastructure business from AMD positions it as a major player in the cloud and AI ecosystem—one of the few genuine growth megatrends powering tech stocks this decade.

The numbers tell the story: SANM delivered another beat-and-raise quarter in early November with sales climbing over 7% and adjusted earnings up 14% year-over-year. More importantly, forward guidance screams momentum. Revenue is projected to surge 72% in FY26 and another 14% in FY27, with adjusted earnings expanding 60% and 19% respectively. Analyst consensus has moved dramatically higher—FY26 EPS estimates jumped 39% since publication, while FY27 estimates are 43% higher. This kind of upward revision activity is exactly what separates real momentum from temporary noise.

The stock’s performance confirms the thesis: SANM has delivered a 100% return year-to-date and a remarkable 560% gain over the past decade, outpacing the tech sector’s 405% performance. Yet it trades about 12% below its Zacks price target and recent November peaks, suggesting room for revaluation.

How to Find Momentum Stocks Worth Your Capital: The Screening Approach

Rather than chasing every pop and dip, professional investors use systematic criteria to identify momentum candidates. Here’s what actually works:

The Fundamental Framework Start with stocks carrying the strongest analyst conviction—positions with strong buy ratings backed by meaningful earnings revisions. This filters out speculation and focuses on names with visible catalysts.

Next, apply technical discipline. Look for stocks trading within 20% of their 52-week highs—this ensures you’re buying strength, not trying to catch falling knives. A stock near 52-week highs has proven it can sustain elevated valuations, which matters more than finding “beaten-down bargains” in unstable markets.

Valuation Guardrails Momentum doesn’t mean overpaying. Apply two critical screens: keep the PEG ratio (price-to-earnings relative to growth) at 1.0 or below, ensuring growth justifies the valuation. Pair this with a Price/Sales ratio below 3, adding another layer of reasonableness to avoid bubbles.

Price Action Confirmation Finally, confirm momentum with actual price strength. Stocks showing the highest 12-week price appreciation combined with the above criteria reduce the odds of buying at the absolute peak. This simple ranking by recent momentum ties everything together.

These criteria typically narrow thousands of stocks down to a focused list worth deep investigation. This isn’t about finding diamonds in the rough—it’s about buying companies with visible momentum and fundamental support.

Why This Approach Matters Right Now

The current market environment presents a specific opportunity. The Fed’s interest rate trajectory remains favorable for growth-oriented sectors, earnings revisions are accelerating rather than decelerating, and the AI infrastructure buildout is just entering the exponential phase. These conditions mean momentum stocks—those with genuine business tailwinds—should outperform for the next 12-18 months.

Sanmina’s acquisition and the resulting exposure to cloud and AI infrastructure manufacturing represents this exact opportunity. The company isn’t speculating on AI adoption; it’s providing the physical infrastructure that makes adoption possible. That’s the kind of structural momentum worth paying attention to.

The lesson for December and beyond: how to find momentum stocks that stick around requires combining analyst conviction, technical strength, valuation discipline, and genuine business catalysts. When all four align, you’re not chasing performance—you’re buying structural advantage.