5 robust stocks for the rally ahead
It pays to be long and strong right now. These picks will outpace the major indexes for 2014.
By Jamie Dlugosch
Now that we have that ugly pullback out of the way, we can focus our attention on what to own moving forward.
The Standard & Poor's 500 Index ($INX) is still negative for the year and yet earnings are strong and economic growth is positive. That means stocks are cheaper than they were at the beginning of the year.
Thomas Lee, Chief Equity Strategist for JP Morgan, has a 2075 target on the S&P 500. That's a 13 percent move from Friday's closing prices. If indeed that target is reached, there will be some big profits to be had. Some stocks are likely to do even better than the index.
The bears are getting slaughtered, calling for a market downturn that never comes.
While a 13 percent gain from here pales in comparison to the gains made in 2013, they are still way ahead of other investment classes.
Lee is believes that the bull market is in the middle innings.
Instead of trying to time the market -- something that is impossible to do -- it is far better to own stocks at cheap prices. Let them appreciate as they are likely to do. Jumping in and out of stocks is a sure-fire way to lose money.
In this market it will pay to be long and strong. So, what should we be buying and holding today?
Here are five picks that should outpace the major market indexes for the remainder of the year:
Micron is a microcosm of the entire market. Its shares soared in 2013. The gains were so large that many are betting against this company. Even more are betting on the stock.
DRAM prices have firmed in such a way that profits are flowing and growing. The stock is in the middle innings and I want to own this one to $30 per share. Analysts expect the company to grow profits by 20 percent from the current fiscal year ending Aug. 30, 2014 to the next. At current prices, shares trade for 12 times current fiscal year estimated earnings.
As the U.S. economy emerges from a long slumber, pent-up demand for construction projects will spur strong profit growth for equipment maker Manitowoc. Analysts are looking for 20 percent profit growth this year and even more than that in 2015.
At current prices, shares trade for 17 times 2014 estimated earnings. At these discounted prices investors are getting a steal. A 13 percent move in the major indexes should equate to a 20 percent move here or more.
Huntington Industries (HII)
Navy ship builder Huntington Industries is a great stock to own in the current economic environment. Stability in Washington means no worries about budget cuts. Building ships adds to the economy and with constant global instability the demand will always be there.
Analysts expect Huntington to grow profits by 35 percent in 2014. At current prices, you can buy that growth for 16 times 2014 estimated earnings. That's a steal and could result in a 30% percent move higher between now and the rest of the year.
Arris Enterprises (ARRS)
Shares of Arris jumped last week after Comcast (CMCSA) announced a bid to buy Time Warner Cable (TWC). That deal put Arris in the spotlight as its technology is likely to be a key component in the cable industry's fight to keep customers from cutting the cable.
There is huge growth potential here and that's why the stock deserves a premium valuation. Analysts expect Arris to grow profits by 32 percent in 2014. At current prices, shares trade for only 13.5 times 2014 estimated earnings. To the extent economic growth is better than expected this year, this stock could double in value from current prices.
American Airlines (AAL)
Predictably, airline stocks struggled last week. The winter that has gripped much of the nation produced more havoc last week, resulting in cancelled flights and other chaos. Investors used the weather as an excuse to lock in profits for what has been one of the best industries to own in the last year plus.
I’d use the weakness as a reason to buy shares at current prices. The airline industry is a money-maker with or without weather-related delays. When this weather passes, the money printing will continue. Analysts expect American Airlines to grow profits by 59 percent in 2014. You can buy that growth for just 7 times 2014 estimated earnings. Buy, buy and buy some more.
More from Traders Reserve
- Is Bitcoin right for you? 4 ways to invest
- 3 natural gas plays to heat up your portfolio
- 5 tech stock bargains screaming 'Buy'
We have Zeroed in your ISP, Fatty. Appears the connection is coming from a Library domain...
We are coming to get YOU....!!
Dividends,DRIPS, and Compounding can go a long way to being comfortable..
Sell and take cash when you need to...
Diversity and re-allocations are a must, for us.
But I find it extremely difficult to garner up to, or more then 7% in dividend returns..
If you are diversified in several Sectors, or 2-3 dozen Companies.
More interestingly, American has an earnings announcement due shortly and this buy recommendation comes out before it. Hmm.
Mick, If memory serves me correctly...? Jamie Dlugosch is somewhat more of a Bull then a Bear...
And maybe even a little contrarian at times?
I have trouble keeping track of some of the Contributors anymore...
May be part of the reasoning behind his buy recs....
But 7 times earnings I don't believe is too bad of a deal, if someone is into Airlines.
And he is parroting some of his other analyst's research also.
Airline stocks may have struggled last week, but buying on "weakness" doesn't fit American Airlines, which is up 36% in 38 days after merging with U.S. Airways.
American Airlines still looks like a buy, but there's always a risk with airline stocks.
"The bears are getting slaughtered, calling for a market downturn that never comes."
lmfao ....you had a little 6% relief rally built on the backs of momentum stocks (apple, amazon, fedex, facebook, netflix, twitter, tesla, etc.) .... big deal - all on below-average volume and no market breadth whatsoever ...
gold has soared based on safe haven demand, the vix is elevated as is the skew index and the cnn fear & greed index, bonds are soaring as new cash floods in reducing rates now down to 2.70% and going lower, growth slowing, tapering increasing, japan gone insane with rabid frantic terrified money printing and bank lending, china shadow banking going bust soon to engulf the entire system, economic reports and imf citing slower growth, italy and greece just "outed" as no more german support since they have not made structural changes over past 3 years, blood and rioting and death in the streets of thailand and ukraine, growing wealth divide unrest, widespread political/bank/ceo corruption, environmental rape and pillage, china wealth fleeing the country secretly like rats off a sinking ship, and on and on ... losses today and the futures are down for thursday setting up our beef-steak bull grilling for the weekend ...
whatever - we are nimble ... so we'll see, won't we?
"You bulls should have let yourselves get killed a long time ago when you had the chance. See, you may be the biggest thing that ever hit this area, but you're still two-bit outlaws. I never met a soul more affable than you, Butch, or faster than the Kid, but you're still nothing but two-bit outlaws on the dodge. It's over, don't you get that? Your times is over and you're gonna die bloody, and all you can do is choose where."
oh, don't get me started ...
"It pays to be long and strong right now."
Not. It will pay more to have a Plan B and re-invest outside of the organized rigged Wall Street-run markets. Stocks, bonds, real estate, metals, commodities... all of these were pumped by QE. It is going away. All that remains are the artificially inflated prices. Lowest number of mortgage apps and not enough private owner sales to bolster appraisals. Rents are ridiculous and out of whack with wages. Remember, the banks will be forced-closed BEFORE the markets crash. With no place to go, you get to watch your game tokens simply evaporate. Ignorance and arrogance aren't good tools for investors.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.