U.S. equities are bounding higher on Monday as President Trump softens his stance against China — delaying the imposition of new import tariffs and lightening the restrictions against Huawei — while at the same time stepping up his calls for the Federal Reserve to increase its monetary policy support of the economy (and financial markets).
The result is that the Dow Jones Industrial Average has bounced off of its 200-day moving average and climbed back over the 26,000 level. The Nasdaq Composite is back over 8,000. And the S&P 500 is closing back in on its 50-day moving average.
The takeaway: Another medium-term rally appears to be upon us. To maximize exposure, consider these four cheap stocks for promising turnaround plays:
Smart speaker maker Sonos (NASDAQ:SONO) is enjoying a near 12% rally this morning, breaking out of a post-IPO trading range going back to December. The company recently put a co-branded low-cost speaker into IKEA stores and is reportedly preparing a launch of a portable Bluetooth speaker into its lineup. Shares were upgraded today by Raymond James analysts, who are looking for a $19 price target.
The company will next report results on Nov. 6 after the close. Analysts are looking for a loss of 19 cents per share on revenues of $300 million. When the company last reported on Aug. 7, a loss of 13 cents per share beat estimates by 3 cents on a 24.8% rise in revenues.
Shares of fast food icon Wendy’s (NASDAQ:WEN) are pushing up and over a three-month consolidation range to push to new highs. The momentum was spurred by a better-than-expected quarterly report featuring a 29% year-over-year rise in earnings thanks to a 1.4% rise in comp-store sales. Traction is being seen for its Biggie Bag promotion as well as its Made to Crave chicken sandwiches.
The company will next report results on Nov. 6 before the bell. Analysts are looking for earnings of 16 cents per share on revenues of $429.7 million. When the company last reported on Aug. 7, earnings of 18 cents per share beat estimates by a penny on a 5.9% rise in revenues.
Genworth Financial (GNW)
Shares of Genworth Financial (NYSE:GNW) have broken up and above their 200-day moving average, returning to levels last seen in late February. Watch for a return to the upper end of a five-year trading range with a move to the $5-a-share level, which would be worth a gain of roughly 15% from here. The company is a provider of mortgage insurance products.
Management will next report results on Oct. 29 after the close. Analysts are looking for earnings of 24 cents per share on revenues of $2.1 billion. When the company last reported on July 30, earnings of 40 cents per share beat estimates by 13 cents on a 0.1% decline in revenues.
Extraction Oil & Gas (XOG)
Extraction Oil & Gas (NASDAQ:XOG), an independent energy company focusing on developing assets in the Rocky Mountain region, looks ready to emerge from a year-to-date consolidation range with a move above its 200-day moving average — a level that was last crossed in the summer of 2018. Coverage was recently started on the company by analyst at KeyBanc Capital Markets, who initiated with a neutral rating.
The company will next report results on Oct. 31 after the close. Analysts are looking for a loss of 6 cents per share on revenues of $237.4 million. When the company last reported on Aug. 1, earnings of 22 cents missed estimates by 7 cents per share on nearly a 15% decline in revenue.
As of this writing, William Roth did not hold a position in any of the aforementioned securities.
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