If there’s one drawback of this epic bull market run, it’s the feeling that all the profits have been made. How can you possibly make any money when the indices are almost daily making new highs? Well, if you can break out of the “buy low, sell high” mentality, then you’ll find that a stock nearing its 52-week high does not mean it has run out of gas.
The ‘Zacks #1 Rank Uptrends’ premium screen can help you find those companies that have been moving upward…and should continue to do so. Along with the Zacks Rank and positive momentum parameters, this screen also seeks out stocks that have market-beating relative price strength and are trading in the top third of their 52-week price range.
At the moment, there are 53 stocks that have passed this screen. That’s 53 Zacks Rank #1s that are enjoying strong buying demand and are outpacing the market. Today’s article highlights just three of them. When you’re done reading these profiles, make sure you go to the screen for a look at its parameters and the full list.
Microchip Technology (MCHP)
You’ve probably heard that semiconductors is one of the best spaces in the market these days. For example, the semiconductor – analog & mixed area is in the top 7% of the Zacks Industry Rank with the 18th spot out of more than 256 industries. It’s year-to-date (YTD) return is approximately 10.3%. That’s a great performance so far in 2017. But it’s not as good as Microchip Technology (MCHP). The stock is up approximately 12.4% YTD, and its expanding product portfolio suggests that it can continue to outperform its industry and the overall market for the foreseeable future.
MCHP is one of the fastest-growing providers of microcontrollers, specifically of the 16-bit and 32-bit types. Microcontrollers accounted for 63.1% of revenue in its fiscal third quarter, where net sales of $881.2 million soared by nearly 60% year over year. Earnings per share reached $1, or 23.5% better than the Zacks Consensus Estimate of only 81 cents. MCHP is still a few dollars below its 52-week high of $76.50, and seems all set to move past that number given solid performances like this one.
Three of 4 covering analysts raised estimates for this year and next over the past 30 days. In that timeframe, the Zacks Consensus Estimate for the year ending this month jumped 13.2% to $3.60. Earnings estimates for the fiscal year ending March 2018 are up 16.3% to $4.22, which suggests a year-over-year improvement of more than 17.2%. Earlier this week, MCHP narrowed its consolidated net sales guidance for the current quarter to between a loss of 0.5% and a gain of 2.5%, leaving the mid-point expectation unchanged at a 1% advance.
Microchip Technology Incorporated Price and EPS Surprise
Microchip Technology Incorporated Price and EPS Surprise | Microchip Technology Incorporated Quote
NetApp Inc. (NTAP)
NetApp Inc. (NTAP) is a leading provider of innovative data management solutions that simplify the complexity of storing, managing, protecting and retaining enterprise data. OK, so in other words it’s a data storage company, which means its part of a space in the top 9% of the Zacks Industry Rank. Specifically, it’s number 23 out of 256. But much like Microchip Tech, this stock is beating its lofty industry year to date. NetApp is up approximately 18% so far in 2017, while the computer – storage devices industry has increased only 15.4%.
The company is gaining a lot of ground with its flash-based solutions, which grew 160% in the quarter. One of its newest products was the NetAppTMAll Flash FAS (AFF) A200, an entry-level system that delivers enterprise-grade flash performance with an eye toward midsize businesses that are making the move to all flash. Such products helped the company report a solid fiscal third quarter, which included a 22% positive surprise and net revenues of $1.4 billion that improved 1% year over year. Its net revenues outlook for the current quarter is between $1.37 billion and $1.52 billion, giving it an excellent chance to beat expectations.
Since the quarterly announcement in mid-April, analysts have been jumping at the chance to raise NTAP’s earnings estimates. The Zacks Consensus Estimate for this fiscal year, ending next month, improved 9.4% in the past 30 days to $2.09. Out of 12 covering analysts, nine of them raised estimates while none lowered. Earnings estimates for next fiscal year, ending April 2018, are up 11.7% in that time to $2.39 with 10 analysts boosting expectations. Therefore, next fiscal year is currently expected to grow by 14.4%.
NetApp, Inc. Price and Consensus
NetApp, Inc. Price and Consensus | NetApp, Inc. Quote
Owens Corning (OC)
You have to go back to July of 2014 to find a quarter where Owens Corning (OC) failed to beat expectations. This construction materials company is on a 10-quarter winning streak. Most recently, it beat the Zacks Consensus Estimate by 18% in its fourth quarter report from early February. The past four quarters has seen an average positive surprise of 35.1%. For all of 2016, adjusted earnings per share of $3.63 were an improvement on the previous year’s $2.57. Revenue in the quarter topped expectations by 5% to $1.38 billion, while the full year saw an improvement of 6% to $5.7 billion from the previous year.
All covering analysts raised their estimates for this year over the past 30 days, sending the Zacks Consensus Estimate higher by 4.9% to $3.89. Analysts are also raising for 2018, but the uptrend is not as dramatic. Still, Owens Corning is expected to earn $4.31 next year, which would mark a 10.8% improvement over 2017. Looking forward, the company stated that it “expects an environment (in 2017) consistent with consensus expectations for U.S. housing starts and moderate global industrial production growth”.
OC is big in insulation, roofing and siding products, along with other building materials systems and composite solutions. The company is up nearly 25% since the election. Interestingly though, its industry (building products – misc) is not highly ranked at the moment. Perhaps more specifics from President Trump on his infrastructure plans will help this space along moving forward. For now, OC remains the only Zacks Rank #1 (Strong Buy) in its industry and enjoys a Zacks VGM Score of A.
Owens Corning Inc Price, Consensus and EPS Surprise
Owens Corning Inc Price, Consensus and EPS Surprise | Owens Corning Inc Quote
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