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The Zacks Analyst Blog Highlights: ELEMENTS SPECTRUM Large Cap U.S. Sector Momentum Index ETN, Advanced Micro Devices, AK Steel Holdings, Theravance Biopharma and Fairmount Santrol Holdings

Zacks Equity Research

For Immediate Release

Chicago, IL – December 23, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include ELEMENTS SPECTRUM Large Cap U.S. Sector Momentum Index ETN (NYSEARCA: EEH – Free Report), Advanced Micro Devices Inc. (NASDAQ:AMD – Free Report), AK Steel Holdings (NYSE:AKS – Free Report), Theravance Biopharma Inc. (NASDAQ:TBPH – Free Report) and Fairmount Santrol Holdings Inc. (NYSE:FMSA – Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday’s Analyst Blog:

Santa on His Way to Take Over Trump Rally

Thanks to the pro-growth economic policies of President-elect Trump, the U.S. stock market has been on a torrid run since election. In fact, the major indices hit a series of fresh highs lately with the S&P 500 and Dow Jones gaining about 3% and 4.3%, respectively, so far this month. This justifies the market belief that December is the best performing month for the stocks.

However, with only six trading days left this year, investors are wondering whether this Trump rally can be taken over by Santa. A Santa Claus rally refers to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) that extends into the first two days of the New Year. According to the 2016 Stock Trader’s Almanac, the Santa Claus rally has yielded average cumulative returns of 1.4% in 34 of the past 45 holiday seasons over the seven-day period since 1969.

Santa Yet to Arrive: Reasons

Given the encouraging macro trends and investors’ increased appetite for riskier assets (i.e. equities over bonds), Santa seems to be coming to the stock market this year as well. Though good tidings have already started flowing in thanks to Trump, year-end seasonal factors such as holiday optimism, tax-related affairs, investment of Christmas bonuses, mutual fund manager window dressing, and the “January effect” will continue to push stocks higher (read: S&P 500 On A Bull Run: Bet on Leveraged ETFs for 2017).

Additionally, a slew of upbeat economic data on employment, manufacturing, housing, consumer spending, and GDP growth supports the Santa Claus rally. In particular, consumer sentiment in early December rose to the highest level since January 2015, according to the University of Michigan. The Fed’s second lift-off in a decade and its hawkish stance for 2017 infused optimism in the market, indicating that the economy is on a strong footing and that the stocks will move up further.

Given continued bullish sentiments, we strongly believe that there will be a Santa Rally. While most of the ETFs and stocks will see a nice boost, we have highlighted those that are expected to outperform in the seven-day period and are intriguing choices for a short spell. Notably, high beta and high momentum products are expected to lead the market in the weeks ahead.

This is because high beta funds experience larger gains than the broader market counterparts in a bullish market. On the other hand, momentum investing looks to capture profits from buying hot stocks, which have shown an uptrend over a few weeks or a few months.

ETF to Buy

ELEMENTS SPECTRUM Large Cap U.S. Sector Momentum Index ETN (NYSEARCA: EEH – Free Report)

This is an ETN option having a unique momentum strategy that seeks to increase exposure to the sub-indices that outperform the S&P 500 while reduce allocations of underperformers. The note comes with a cash payment at the scheduled maturity or early redemption based on the performance of the SPECTRUM Large Cap U.S. Sector Momentum Index. The ETN charges a higher 75 bps in fees per year. Though it is unpopular and illiquid with just $2 million in AUM and average daily volume of under 1,000 shares, it has added about 3.5% so far this month.

Stocks to Buy

For stocks, we have chosen top picks using the Zacks Screener that fits our five criteria: a Zacks Rank #1 (Strong Buy) or #2 (Buy), market cap of over 1 billion, beta greater than 2, Zacks Industry Rank within the top 30% and positive four-week price change. Here are the four chosen stocks (read: 5 ETFs Up Over 100% This Year).

Advanced Micro Devices Inc. (NASDAQ:AMD – Free Report)

Based in Sunnyvale, California, Advanced Micro Devices is a leading semiconductor company engaged in the innovative products and technologies. With a market cap of $10.67 billion and beta of 2.54, the stock has surged 36.7% so far this month. It has a Zacks Rank #2 and a solid Zacks Industry Rank in the top 15%.

AK Steel Holdings (NYSE:AKS – Free Report)

Based in West Chester, Ohio, AK Steel is a leading producer of flat-rolled carbon, stainless, electrical steel products, and stainless tubular steel products that are used in automotive, appliance, construction and manufacturing markets. It has a market cap of $3.43 billion and a beta of 2.65. The stock has a Zacks Rank #2 and falls in the solid Industry with Zacks Rank in the top 17%. It has risen about 16.7% so far this month (read:Steel ETF Looks Promising after Trump Win).

Theravance Biopharma Inc. (NASDAQ:TBPH – Free Report)

Based in George Town, the Cayman Islands, Seagate Technology is a biopharmaceutical company focused on the discovery, development and commercialization of small molecule medicines across a number of therapeutic areas including bacterial infections, central nervous system (CNS)/pain, respiratory disease, and gastrointestinal (GI) motility dysfunction. It has a market cap of $1.64 billion and a beta of 2.48. The stock has gained 14.5% so far this month and has a Zacks Rank #2. It falls in the industry having a Zacks Rank in the top 30%.

Fairmount Santrol Holdings Inc. (NYSE:FMSA – Free Report)  

Based in Chesterland, Ohio, Fairmount Santrol provides sand-based proppant solutions for exploration and production companies to enhance the productivity of their oil and gas wells. With market cap of $2.36 billion, the stock has a Zacka Rank #2 and a beta of 2.30. It has a solid Zacks Industry Rank in the top 11%. FMSA is up 10.6% this month.

Bottom Line

These products could be the winning picks for the next few days, as these would generate above higher returns compared to other products when the market is booming.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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