Four New Horsemen?

 | Oct 12, 2013 | 12:30 PM EDT
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One of the most notable characteristics of the market this year is how there has been very strong leadership from some big-cap momentum names.

I've previously discussed what I call the Four Horseman: Facebook (FB), Tesla (TSLA), LinkedIn (LNKD) and Netflix (NFLX). All of them except for FB have cooled off a bit lately, but it is a good reminder how momentum can be quite fickle.

I often think of momentum stocks as being similar to a Ponzi scheme. The only thing that really matters is that there is a constant supply of buyers who are confident that there will continue to be buying interest as a stock runs.

Momentum stocks almost always seem overpriced and extended, but those are attributes that often keep them running, as shorts are perpetually squeezed. A stock like TSLA, for example, has critics who think its worth a fraction of its current valuation, while others are convinced it will be a huge winner over a period of years.  I have no idea who is right, but what matters most is that the buyers don't give up.

Here are four stocks that are in good position to be momentum favorites into the end of the year.

SolarCity (SCTY) was founded by Elon Musk, who also founded TSLA. That gives the stock a certain cachet among momentum traders who have done very well with TSLA this year. On Friday, SCTY exploded higher after the company said it expects to increase its annual installed capacity by about 90% in the year ahead.  There is big demand for residential solar energy and SCTY's financing options are driving it to a leading position in the sector.

Infoblox (BLOX) is a California-based company that makes security and automation tools that are used in data centers. It has limited competition in an untapped area of the networking business. An analyst at Pacific Crest gave the stock a $52 target on Friday and noted that the company has a large market opportunity in an industry with only 6% penetration.

Vipshop (VIPS). No list of momentum stocks is complete without one China name. VIPS is a China-based online retailer that sells clothing at a discount. Analysts are expecting EPS to double in 2014 to $1.85. Recently, Piper Jaffray raised its target price to $77 from $51. 

LIN Media (LIN) owns and operates 43 TV stations and seven digital channels. It has a portfolio of website applications and mobile products. The company is expected to almost triple its earnings in 2014 to $1.70 per share from 61 cents a share, but trades with a PE of just $20. Analysts at Wells Fargo gave the stock a price target of $28-30 and noted that the company's digital business is driving growth.

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