Look Past the Downturn: 5 Stocks That Rallied Over 5%
The stock market usually takes a rickety ride upwards which involves a set of retracements and a few advancements as well.
After clocking six successive weekly gains, the Standard & Poor's 500 Index broke the spell and fell about 3% last week. Also, the Nasdaq Composite was down over 3%.
What Led to the Slump?
Here is how we summarize the factors that led to the decline last week:
Qualms that the Federal Reserve would lift short-term interest rates in mid-December
Oil prices falling back to their August lows
Conflicting pointers on holiday sales
Slower global growth forecast
Notably, last week's weakness can be largely attributed to uncertainties surrounding the Federal Reserve’s decision over raising short-term interest rates. Meanwhile, decline in unemployment rate and higher average hourly earnings have rekindled hopes of a rate hike in December. Nevertheless, a still-low inflation rate might prevent a rate hike.
A slide in oil prices also weighed on energy shares during the week with the U.S. crude oil plunging to $40.74 a barrel.
Moreover, the Organization for Economic Cooperation and Development (OECD) slashed its global economic growth projections. Worldwide gross domestic product is now anticipated to grow 2.9% in 2015 and 3.3% in 2016, down from OECD’s previous forecast of 3% and 3.6%, respectively.
Meanwhile, the final outlook for the holiday season remains bleak. Though consumer spending hasn’t increased as much as was projected previously, taking energy saving into account, the increase hasn’t been much of a disappointment.
However, weak U.S. retail sales and department store earnings raise concern. The Commerce Department has revealed that retail sales have increased a trivial 0.1% in October from the prior month, against an estimated 0.3% rise. Nonetheless, the University of Michigan's estimate of consumer sentiment exceeded most expectations.
Concurrently, the other factors include weakness in China’s trade and industrial output, decline in U.S. import prices, and retarding growth in the Eurozone.
Optimism Remains
Clearly, investors have ample reasons to worry about but they don’t need to dread further mayhem just yet.
Last week’s pullback in U.S. stocks came after a rebound in October. However, the long-term fundamentals of the U.S. economy and equity markets are in place. In fact, it is broadly expected that the U.S. will lead the world’s growth story in the imminent times. We also expect the economy to gain traction, posting solid growth this year and next.
As per International Monetary Fund (IMF), the U.S. economy will likely grow 2.6% in 2015 against the previous estimate of 2.5% growth. October data released by the U.S. Bureau of Economic Analysis also raises optimism.
What Should Investors Do?
Even markets as capricious as this provide scope for fine trading for those who know how to cash in on the situation.
Notably, despite the adversities playing spoilsport last week, there are a few stocks that have held the fort. Investments in these trend-beating money minters can not only help tide over the present economic slump but also lead to profitable gains even in times as tricky as this.
But how do we steer in the extensively broad market and find the diamonds in the rough?
Zacks to the Rescue
With the help of the Zacks Stock Screener, we have zeroed-in on five stocks that have rallied an impressive 5% or more over the last one week, and also flaunt a solid Zacks Rank.
These stocks have survived the chaos last week. Moreover, other encouraging metrics indicate that they hold excellent prospects and would thus make for relatively safe investment options.
Stocks that Rallied
TAL Education Group XRS provides K-12 after-school teaching services in China. Pessimism over China’s economy has been prevailing for some time now. However, fresh indicators suggest that the economy may soon be firming up and thus investing in this Zacks Rank #1 (Strong Buy) company, which is headquartered in Beijing, may be a wise choice.
TAL Education Group has surged over 6% last week. Additionally, the company’s estimates have been moving north over the past one month, which has lifted its Zacks Consensus Estimate for 2015 earnings from $1.01 per share to $1.37.
Mylan N.V. MYL specializes in the development, manufacture, marketing and distribution of generic, branded and branded generic pharmaceutical products, as well as active pharmaceutical ingredients. We are encouraged by the strong sales at the Generics segment, the company’s robust pipeline and focus on emerging markets.
Mylan, which surged over 8% last week, currently has a Zacks Rank #2 (Buy). Moreover, analysts have become increasingly bullish on the company over the past one month, leading to a rise of 2.6% in the Zacks Consensus Estimate for 2015 earnings, which now stands at $4.30 per share.
Nevro Corp. NVRO is a medical device company, engaged in the development and commercialization of a neuromodulation platform for the treatment of chronic pain. Shares of this Zacks Rank #2 company continue to rally following the better-than-expected third-quarter 2015 results and encouraging revenue guidance for full-year 2015 issued on Nov 9.
The stock has gained over 7% since then. Moreover, the Zacks Consensus Estimate for the current year has narrowed from a loss of $2.79 per share to $2.64 over the past 30 days.
The Chefs' Warehouse, Inc. CHEF is a distributor of specialty food products in the U.S. The company recently raised its outlook for the remainder of 2015, considering its year-to-date results as well as the recent trend in its business.
This Zacks Rank #2 company gained nearly 7% in the last 5 trading days. Moreover, the Zacks Consensus Estimate for the current year has increased from 71 cents per share to 74 cents over the past 30 days.
ServiceMaster Global Holdings, Inc. SERV provides outsourcing services for residential and commercial customers. The company intends to continue to invest in both technology and marketing to drive growth. Moreover, a healthy guidance for full-year 2015 adds to the optimism.
Flaunting a Zacks Rank #2, this Memphis, TN-based company jumped over 5% in last week’s trading. Moreover, the company has been witnessing upward estimate revisions for earnings. Over the past one month, current year estimates have risen from $1.72 per share to $1.78.
Best Buys
Most of the arrows are pointing toward a turnaround, following last week’s rout. However, the challenges cannot be denied and only a smart investor will know how to take advantage of the tumultuous scenario.
While the above-mentioned stocks may not be breaking out to new highs, they definitely hold immense potential.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
MYLAN NV (MYL): Free Stock Analysis Report
CHEFS WAREHOUSE (CHEF): Free Stock Analysis Report
TAL EDUCATN-ADR (XRS): Free Stock Analysis Report
NEVRO CORP (NVRO): Free Stock Analysis Report
SERVICEMASTR GH (SERV): Free Stock Analysis Report
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