The U.S. stock market closed on a downbeat on Friday, January 31, as investors grappled with the announcement that President Donald Trump’s new tariffs on major trading partners would take effect the following day. The Dow Jones Industrial Average tumbled 0.75%, to close at 44,544.66 and the S&P 500 shed 0.50% to close at 6,040.53, while the Nasdaq Composite slipped 0.28% to 19,627.44. However, the day marked the end of a tumultuous January for traders with the three major averages still managing to post monthly gains. The S&P 500 rose 2.7%, the Nasdaq advanced 1.6%, and the Dow surged 4.7%.

Economic data released on Friday also influenced market sentiment. The December data for the personal consumption expenditures (PCE) price index, which is the preferred inflation gauge of the Federal Reserve, showed an increase of 0.3% from November and a 2.6% annual rate. While this yearly advance was in line with economists’ expectations, it marked an acceleration from the prior month’s annual rate of 2.4% and raised concerns that inflation remains sticky.

Tom Hainlin, a senior investment strategist at U.S. Bank Asset Management Group, noted that the market’s initial reaction to the tariff news was to sell, much like the reaction to the DeepSeek AI developments earlier in the week. Trump will be imposing a 25% tariff on Canada and Mexico, alongside a 10% duty on China. However, Hainlin explained that there are no details about tariffs, whether they are temporary or permanent, or what the potential responses from Canada, Mexico, or China might be.

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In an interview with CNBC on January 22, Jamie Dimon, Chairman and CEO at JPMorgan Chase, discussed a range of economic and political issues, including market conditions, the impact of a strong dollar, and the broader economic policies of the United States. Dimon began by addressing that the current state of the U.S. stock market is elevated and stocks trading at a historic price-to-earnings ratio. Dimon believes that the stock prices must be justified by strong growth and there is a need for good outcomes to sustain these levels.

Dimon suggested that the strength of the dollar is an outcome of broader economic factors and that a strong dollar can have its benefits but it can also have negative effects, especially for international companies dealing with tariffs and trade tensions. However, Dimon downplayed the significance of the strong dollar, stating that it is less important than many people think and that the most crucial factor remains economic growth.

Dimon further discussed the challenges of implementing growth strategies, emphasizing that while many recognize the need for change, the real challenge lies in execution. He also addressed the geopolitical issues with Ukraine, Iran, Russia, North Korea, and China, expressing that these issues can affect the world in the long term. He noted that while tariffs are a significant topic of discussion, they are just a tool in a broader economics and national security strategy. Overall, Dimon is cautiously optimistic about the economy and highlighted concerns about government spending, potential inflation, and the global economic landscape.

While the market appears overvalued and faces significant headwinds, some stocks are performing exceptionally well and hold significant potential. With that in context, let’s take a look at the 12 best booming stocks to invest in now.

Our Methodology

To compile our list of the 12 best booming stocks to invest in now, we used Finviz and Yahoo stock screeners to identify the 30 largest companies whose stock prices have increased by at least 35% year-to-date as of January 30. We then used Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

12 Best Booming Stocks to Invest in Now

12. Dana Incorporated (NYSE:DAN)

Number of Hedge Fund Holdings: 24

Year-to-Date Performance as of January 30: 43.43%

Dana Incorporated (NYSE:DAN) is a global leader in drivetrain and powertrain solutions for conventional, hybrid, and electric vehicles. The company provides axles, driveshafts, transmissions, and thermal management products to automakers such as Ford, General Motors, and Tesla. Dana Incorporated (NYSE:DAN) has a presence in more than 30 countries and is expanding its capabilities in e-mobility and advanced propulsion systems.

Dana Incorporated (NYSE:DAN) has recently announced a major cost reduction plan aimed at achieving $300 million in annual cost savings by 2026. These cost-saving measures include reducing engineering and overhead expenses, particularly in the electric vehicle (EV) segment, where the company has decided to adopt a more stringent approach to new business opportunities. The early success of these initiatives, with $10 million in cost savings already realized in the fourth quarter of 2024, has bolstered investor confidence and contributed to the stock’s positive performance.

Another key factor behind Dana Incorporated’s (NYSE:DAN) stock price increase is the company’s decision to divest its Off-Highway business. This strategic move is expected to generate substantial proceeds, which the company plans to use to strengthen its balance sheet and return capital to shareholders. The sale of the Off-Highway segment will allow Dana Incorporated (NYSE:DAN) to focus on its core Commercial and Light Vehicle markets, where it can leverage its expertise and market position more effectively. UBS analysts have noted that the proceeds from this sale will enable the company to move from a net debt to a net cash position and will significantly improve its financial flexibility and free cash flow (FCF) conversion.

11. MP Materials Corp. (NYSE:MP)

Number of Hedge Fund Holdings: 27

Year-to-Date Performance as of January 30: 39.36%

MP Materials Corp. (NYSE:MP) is a leading producer of rare earth minerals that are essential for manufacturing electric vehicles, wind turbines, and high-tech defense systems. The company operates the only large-scale rare earth mine in North America at Mountain Pass, California, and helps reduce U.S. reliance on China for critical minerals. MP Materials Corp. (NYSE:MP) supplies minerals to major manufacturers and government agencies.

MP Materials Corp. (NYSE:MP) has recently inaugurated its state-of-the-art Independence facility in Fort Worth, Texas, which is set to become the first fully integrated rare earth metal, alloy, and magnet manufacturing facility in the United States. One of the primary factors driving the stock price increase for MP Materials Corp. (NYSE:MP) is the commencement of commercial production of neodymium-praseodymium (NdPr) metal at the Independence facility. This milestone marks a significant step in the company’s strategy to reestablish a fully integrated rare earth magnet supply chain in the United States.

MP Materials Corp. (NYSE:MP) has also announced a strategic partnership with General Motors (GM), which has also contributed to the stock’s positive performance. The company will supply a significant portion of the NdFeB magnets required by GM, which will provide a steady demand for the company’s products and will enhance the company’s reputation as a reliable and innovative supplier in the rare earth materials sector.

The increasing global demand for rare earth materials, particularly in the EV and renewable energy sectors, has also been a significant driver of MP Materials Corp.’s (NYSE:MP) stock performance. The company plans to gradually ramp up production at the Independence facility and aims to reach approximately 1,000 metric tons of finished NdFeB magnets per year, which will further solidify the company’s market position and drive long-term profitability.