While business fundamentals are important, momentum also has a role when investing in ASX shares.
Yes, the share price theoretically should reflect how well the company is going. But it's also a reflection of how popular the stock is.
The underlying business could be super profitable with customers lining up, but if investors flee then the stock price will head down.
So let's take a look at two S&P/ASX 200 Index (ASX: XJO) shares that have gone gangbusters so far this year, which one expert reckons has more to come:
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'Long and bullish'
Despite rising interest rates dampening the housing market, construction materials provider James Hardie Industries plc (ASX: JHX) has seen its shares rocket 44% year to date.
Shaw and Partners portfolio manager James Gerrish attributed this rise to "a positive interpretation of its results".
"James Hardie is a manufacturer of fibre cement building products, with operations across North America, Europe and Asia-Pacific," he said in Market Matters.
"We still see greater than 25% North America EBIT margin as the key upside from the FY23 result."
Despite the steep run up in its valuation, his team continues to be "long and bullish" for James Hardie shares.
"We note the… chart pattern of a 'recovery stock'. i.e. As we often say, the markets are like a jigsaw where you need to predict the final picture without all of the pieces," Gerrish said.
"We are initially targeting ~$40 for JHX but believe surprises are likely to be on the upside."
James Hardie shares closed Monday at $37.78.
Kicking goals on the other side of the world
Coincidentally, shares for travel agent Corporate Travel Management Ltd (ASX: CTD) are also 44% higher than where they started 2023.
According to Gerrish, the main driver of this was a massive contract win in the United Kingdom.
"[The deal] highlighted the strength of the UK business plus the way Corporate Travel is regarded by the UK government," he said.
"We estimate a potential upside of 10% to 13% from the contract which has been reflected by the share price."
Perhaps this one is a bit closer to its peak than James Hardie, which makes Gerrish's team wait for $2 to $3 pullbacks before buying.
Regardless, he said the stock is "looking well positioned through 2023".
"The company differentiates itself from competitors through its superior technology offering and its return on investment focus, which aims to reduce clients' overall travel spend."
