I see Ocado has been ipgraded from Sucker Stock to Momentum Trap but am bemused to see it qualifies for a 52 week high momentum screen, which to me represents the exact opposite of a trap ?
The "momentum trap" classification means it doesn't have strong value or quality scores (relative to other stocks), but it doesn't mean momentum is absent.
Momentum trap stocks can be a mixed bag... when you're in a strong bull market (e.g. 2013, 2017, 2020/2021), these stocks tend to outperform significantly, especially if they are small /mid caps. However, they underperform during sideways / bear markets as investor caution means money flows into quality / defensive businesses.
Personally, I don't exclude momentum traps but I scale back and forth into them depending on market conditions. At the moment, it only makes 10% of my portfolio (I'm in Aston Martin Lagonda Global Holdings (LON:AML) and Carnival (LON:CCL)
