It has been a choppy ride for the stock market so far this year. The U.S.-China trade war, uncertainty over Brexit, tech weakness, declining oil prices, the U.S. Federal Reserve’s hawkish stance related to interest rate hikes are factors that induced volatility.
These developments overshadowed upbeat U.S. GDP and lower unemployment levels keeping the stock market highly strained.
A View of the Macroeconomic Factors
The U.S.-China trade war that resulted in tariffs on imports from China worth $250 billion ($50 billion in August & $200 billion in September) negatively impacted technology, materials and industrial sectors.
Moreover, British Prime Minister Theresa May’s tentative “withdrawal agreement” with the European Union (EU) failed to get an approval from her own party, increasing uncertainty over Brexit. The United Kingdom is scheduled to leave the EU on Mar 29, 2019 — deal or no deal.
Further, the technology sector is having a shattering year, thanks to heightened concerns over data privacy that have called for increased regulation and strict monitoring of social media companies globally.
Moreover, implementation of General Data Protection Regulation (GDPR) impeded growth in Europe. Further, NAND price crash and the tariffs on semiconductors owing to trade tensions brought no respite.
A Guide to the Right Picks
Volatility and macro-economic headwinds dragged down several stocks in 2018. Although the story of 2019 is in the making, the trade war truce, an anticipated pick-up in the economy and better job prospects are likely to turn things around on the bourses.
However, finding stocks that are likely to rebound in 2019 is no mean feat.
Here, Zacks’ proprietary methodology comes in handy. Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Here we pick five stocks that not only flaunt a Zacks Rank #1 but also have solid fundamentals. Notably, these stocks have lost more than 30% so far in 2018.
Our Stock Picks
Castlight Health, Inc. CSLT shares have shed 36% year to date, underperforming the 4.1% rally of the industry it belongs to. Walmart’s refusal to renew contract with the company marred performance in 2018.
However, we believe the company is well positioned to benefit from robust adoption of its Castlight Complete and Anthem Engage product suite in 2019.
Over the past 60 days, the Zacks Consensus Estimate for its 2019 earnings has remained steady at 1 cent, reflecting year-over-year growth of 117.5%.
Ashford Inc. AINC stock has lost 37.5% value year to date, underperforming the 24.2% decline of the industry it belongs to.
Ashford’s efforts in expanding existing REIT platforms, namely, Ashford Hospitality Trust and Braemar Hotels and Resorts, are key catalysts.
In the past 60 days, the Zacks Consensus Estimate for its 2019 earnings has increased 13.5% to $7.59, reflecting year-over-year growth of 9.5%.
Obalon Therapeutics, Inc. OBLN shares have shed 73.9% year to date, underperforming the 12.2% rally of the industry it belongs to.
Rapid growth in reorder kit sales and increasing number of active accounts are anticipated to reinforce investors’ confidence. Further, initiatives to increase patient conversion rates hold promise.
Over the past 60 days, the Zacks Consensus Estimate for 2019 has narrowed from a loss of $1.77 to $1.37.
TC PipeLines, LP TCP stock has lost 38.1% year to date, underperforming the 4% decline of its industry.
TC Pipelines’ enviable position as a supplier of gas from some of the most important shale basins in the United States — including the Utica and the Marcellus — provides it with ample opportunities. Moreover, TCP Pipelines benefits from its stake in the Northern Border Pipeline, the primary transporter of gas from the low-cost Western Canada Sedimentary Basin.
Over the past 60 days, the Zacks Consensus Estimate for 2019 has moved 14.7% north to $3.36.
PC-Tel, Inc. PCTI has lost 44.4% year to date, underperforming the 10.5% rally of the industry it belongs to.
PC-Tel is expected to benefit from growing adoption of 5G, antennas and industrial Internet of Things (IoT). Moreover, stabilizing cell revenues driven by customer wins in China, North America and Europe is positive.
In the past 60 days, the Zacks Consensus Estimate for 2019 has remained steady at 8 cents, reflecting year-over-year growth of 233.3%.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>
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
Castlight Health, inc. (CSLT) : Free Stock Analysis Report
TC PipeLines, LP (TCP) : Free Stock Analysis Report
PC-Tel, Inc. (PCTI) : Free Stock Analysis Report
Ashford Inc. (AINC) : Free Stock Analysis Report
OBALON THERPTCS (OBLN) : Free Stock Analysis Report
To read this article on Zacks.com click here.