Relative Strength Alert: Top Ranked Stocks Holding Up in a Weak Market
During periods of extended selling, like we have seen over the last few weeks, scanning for stocks showing relative strength can be a great place to look for future winners. Often the stocks that can attract buyers during a correction are the stocks that will outperform in the next move higher.
Here, I will show you two top ranked stocks that are showing considerable relative price strength, as well as growing sales and earnings.
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VMware
VMware VMW is a global leader in cloud infrastructure and digital workspace technology. The company's software solutions help businesses streamline IT operations, enabling efficient deployment, management, and scaling of applications and services across various platforms and devices. As the pioneer in developing core x86 server virtualization software solutions, VMware has and continues to play a pivotal role in facilitating the digital transformation of companies.
VMware stock has barely budged amidst the growing sell off in the stock market. While the S&P 500 is down nearly -9% from its higher, VMW is building out bull flag, refusing to trade below the $163 level of support.
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Additionally, VMware has been the beneficiary of unanimous upgrades to its earnings estimates, giving it a Zacks Rank #1 (Strong Buy) rating. Current quarter earnings estimates have been revised higher by 6.7% over the last two months and are projected to grow 19% YoY to $1.74 per share. FY23 and FY24 have also increased by nearly 6% and are expected to climb 10.7% and 9.6% YoY respectively.
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VMW is trading at a one year forward earnings multiple of 33.8x, which is just above the industry average of 32.3x, and above its five-year median of 31.4x.
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MakeMyTrip Limited
MakeMyTrip Limited MMYT is a leading online travel company based in India. It offers a comprehensive suite of travel-related services, including flight tickets, hotel reservations, holiday packages, rail and bus tickets, and more. Catering primarily to the Indian traveler, MakeMyTrip provides a user-friendly platform for planning and booking various travel accommodations and services.
As one of the pioneers in the Indian online travel sector, the company has played a significant role in revolutionizing the way Indians plan and book their travels, combining convenience with a wide array of options.
In the chart below, we can see that 2023 earnings estimates have snapped higher over the last 30 days. Current quarter earnings estimates have been revised higher by 69% and are forecast to climb 286% YoY to $0.27 per share. FY23 earnings estimates have jumped higher by 53% and are expected to grow 158% YoY to $1.58 per share.
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Today, MMYT has a forward sales multiple that is right in line with the industry king Booking Holdings BKNG. While some might think owning more market share should give Booking Holdings a premium valuation, it is worth noting that MMYT has tremendous growth tail winds in the Indian market, where it dominates.
With large swathes of the Indian population entering the travel and tourism industry, it is no surprise MMYT projects sales growth of nearly 40% this year and 20% next year.
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VMware, Inc. (VMW) : Free Stock Analysis Report
MakeMyTrip Limited (MMYT) : Free Stock Analysis Report
Booking Holdings Inc. (BKNG) : Free Stock Analysis Report
