Even as the S & P 500 hits a fresh record close, there are still opportunities to find momentum stocks with high free cash flow yield and room to grow, according to Piper Sandler. Wednesday was a huge day for the three major averages, with the S & P 500, Nasdaq Composite and Dow Jones Industrial Average closing at records after the Federal Reserve indicated that three rate cuts are still in the cards for 2024. “While there is a lot of investor angst surrounding high momentum stocks, a large portion of these stocks are in the value bucket! The current momentum trade has much stronger fundamentals than what we saw in 1999/2000, and we believe there is still room to run,” wrote Piper Sandler’s chief investment strategist Michael Kantrowitz. There’s a common misconception that the tech- and AI-adjacent names have led today’s momentum trade, but that’s not the case, the strategist added. In reality, the leadership in momentum stocks has been much more broad-based, he said. Additionally, Kantrowitz highlighted high-quality stocks, or names with high free cash flow yield, as a “must-have” factor for 2024. “Free cash flow yield is a factor that marries quality with valuation. This factor tends to work throughout the majority of the cycle and is one of the top-performing factors throughout the decades,” he wrote. In a Tuesday note, Kantrowitz shared a basket of stocks in the S & P 1500 that are in the top quintile for both momentum and free cash flow yield. Here are a few of the names that were included: Gap , which has rallied nearly 30% in 2024, was one name highlighted by Kantrowitz. The clothing retailer has a 10.8% free cash flow yield. Last month, JPMorgan upgraded Gap to a neutral rating, citing strength in its marketing, inventory and merchandise assortments. Another name on the list is Cigna , which has rallied 18% this year. The health insurance giant has a free cash flow yield of 9.1%. Earlier this month, Barclays initiated coverage of the U.S. health-care facilities and managed care space, giving Cigna a rating of overweight and a price target of $393 — representing upside of 11% from current levels. Wells Fargo , which has risen 16% this year, also made the cut. The stock has a free cash flow yield of 16.2%. Nearly 60% of analysts covering the bank stock rate it a buy or strong buy, per LSEG.