The principle of momentum investing—though contrary to the traditional wisdom of buying low and selling high—suggests that investors can profit by buying rising stocks and selling them before they decline. As a result, momentum is typically favored in short-term and active trading strategies rather than long-term investing.
The key for momentum investors is timing a purchase so that it capitalizes on a stock's popularity among investors while it still has upward potential. Unsurprisingly, many analysts shy away from momentum stocks due to the inherent difficulties in timing this rise and fall trajectory. For investors considering a momentum play early in 2025, three firms that have experienced recent rallies while still enjoying a bullish view by analysts are Compass Therapeutics (NASDAQ:CMPX), Amprius Technologies (NYSE:AMPX), and Allot Communications (NASDAQ:ALLT).
1. Compass Therapeutics: Multiple Promising Drug Candidates
Clinical-stage biopharma firm Compass Therapeutics focuses on antibody-based therapeutics in the area of oncology. Its lead asset is tovecimig, or CTX-009, currently in Phase 2/3 trials with top-line data anticipated by the end of the first quarter of this year. However, Compass also has at least two other drugs in the clinical pipeline, and a number of pre-clinical discovery projects show potential, too.
As a pre-revenue biopharmaceutical company, the key to Compass' success is its cash position. As of the end of the third quarter of 2024, the firm had $135 million in cash reserves, while it noted a quarterly net loss of $10.5 million. At the time of its earnings report for that quarter, the company anticipated its current cash reserves would provide a runway into the first quarter of 2027.
CMPX shares have rallied since early January 2025 on promising updates about tovecimig as well as Compass' other pipeline candidates. In the year leading to January 31, 2025, shares have climbed by 164% (in the 30 days leading to that date, by 130%). And yet, analysts think there is still substantial room for further growth. With four out of six analysts rating Compass a Buy, the consensus price target for this company is $11.80, a full 266.5% above trading levels as of January 31.
2. Amprius Technologies: Big Gains in Customer Interest and Contracts
Amprius Technologies develops and markets high-energy-density lithium-ion batteries for drones and similar tools. The company is rapidly growing in popularity, as it experienced four-fold growth in customers year-over-year in the third quarter of fiscal 2024. Notably, it's also gaining traction with multiple Fortune 500 companies, including a recent announcement of a $20-million contract. The company also continues to make technological strides; in mid-January 2025, it announced a breakthrough cell chemistry for its SiCore platform to improve performance.
As the eVTOL industry continues to surge, Amprius is positioned well to grow alongside rising demand. The company's customers include many major unmanned vehicle firms, such as AeroVironment (NASDAQ:AVAV and BAE Systems.
Amprius shares have fallen by 18% in the last year overall but engaged in a significant turnaround in the second half of 2024. In the six months leading to January 31, 2025, the share price climbed by almost 169%. Despite this rally, analysts remain strongly bullish on Amprius—the company enjoys a unanimous Buy rating from all eight analysts that have reviewed it and has a consensus price target of $9.29, representing more than 181% upside potential.
3. Allot Communications: Telecom Security Business Is Rising
Allot is a telecommunications and security software firm. Its transition to a SaaS model is ongoing and could help drive revenue improvements; the company has experienced mixed revenue performance in recent quarters but returned to growth in the third quarter of 2024. It also notched a positive cash flow and $2 million in increased net cash relative to the end of the previous quarter.
Allot's popularity is growing thanks in part to the success of its security as a service offering, which has drawn customers including Vodafone (NASDAQ:VOD) and Portuguese telecom firm MEO. This has caused shares to skyrocket by more than 343% in the year leading up to January 31, 2025.
Two analysts have rated Allot, each offering a Buy rating. Combined, they suggest a consensus price target of $13, which would suggest substantial room still left to grow based on January 31's value of $8.34 per share.