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Can the Worst S&P 500 Stocks of 2017 Rebound in 2018?
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Markets have enjoyed a strong and enduring rally for nearly all of 2017. Benchmarks have broken several milestones on multiple occasions and are on course to create new annual records. Year to date, the S&P 500 is up more than 20% and is on course to registering its highest gains in four years. Successively strong earnings numbers and robust economic growth have been the primary factors powering these gains.
However, this extended market rally was not without its occasional losses. Lingering fears about inflated valuations have dogged stocks for some time now. Geopolitical concerns, particularly those related to North Korea also threatened to spoil the party on more than one occasion. Also, there was much hand wringing over the likelihood of tax cuts receiving legislative approval before they were finally signed into law last week.
However, it is increasingly likely that the actions of the new administration will boost stocks further in the days ahead. In such a scenario, S&P 500 stocks which have failed to chalk up gains this year should also stand a chance. This is particularly true for stocks with a strong Zacks Rank, which are well placed to ride the continuing market rally in 2018.
Factors which Acted as a Drag on 2017’s Rally
Even though benchmarks are now close to notching up annual records, a variety of factors have threatened to end their long running rally. Concerns about inflated valuations, particularly relating to tech stocks, have had investors worried on more than one occasion. Even though such fears have yet to come true, they continue to persist to this day.
Further, geopolitical concerns have also clouded market sentiment at times. Such worries were especially heightened during North Korea’s recent nuclear tests. Both South Korea and the U.S. government warned of a strong response during these events, leading to losses for stocks.
Coming to specific sectors, energy stocks remained depressed over the year with the Energy Select Sector SPDR (XLE) down 3.6% year to date. During the year, the OPEC and other major oil producers successfully adhered to an output control agreement which lent some support to oil prices. However, a step up in production by U.S. shale producers has led to the persistence of oversupply conditions.
Further, traditional safe haven sectors have been largely ignored during the year, with the Utilities Select Sector SPDR (XLU) up only 7.4% year to date. Instead, investors have favored high growth sectors such as technology in the quest for superlative gains. Industrywide changes have also acted as drags for specific stocks. For instance, the tendency to shop online has caused numerous store closures and created a near brick and mortar apocalypse.
Can Tax Cuts, Infrastructure Spending Boost Gains in 2018?
On last Friday, President Trump finally signed the much anticipated tax Bill into law. The exact earnings impact of the tax legislation is yet to become clear, but preliminary estimates suggest a material earnings boost. S&P 500 earnings in 2018 are already expected to be up 11.8%, with the growth pace expected to roughly double as a result of the tax legislation. (Read: What Will the Q4 Earnings Season Bring?)
And now that President Trump has scored his first major legislative victory, it is likely that he will press forward with another major issue on his agenda, infrastructure reforms. It is now widely expected that the Trump administration will announce a new infrastructure package in 2018.
During his presidential campaign, Trump had promised to implement a $1 trillion infrastructure package. This plan was intended to improve the state of roads, airports and bridges as well as other public works across the country.
Recently Trump has commented that his attempt to improve the country’s infrastructure will easily garner bipartisan support. The major obstacle to be overcome is related to funding and if that does happen, markets could receive yet another boost in the year ahead.
5 Losers Set to Gain in 2018
Even though stocks have notched up strong gains this year, some factors have acted as impediments to gains on several occasions. However, the projected impact of tax cuts and heightened prospects of a new infrastructure package are likely to sustain markets’ rally well into next year.
This is why it makes good sense to bet on those S&P 500 stocks which have taken a beating this year but stand a good chance of notching up gains in 2018. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
Foot Locker (FL - Free Report) reported strong third-quarter fiscal 2017 results, wherein both the top and bottom lines beat the consensus mark. This led the stock to take a huge leap and outpace the industry in a month. Clearly, third-quarter results have given a fresh breath of life to the stock, which in the recent past had struggled on account of dismal performance in the preceding two quarters.
Foot Locker has lost 33.3% year to date. However, it has a Zacks Rank #1 (Strong Buy). Moreover, the Zacks Consensus Estimate for the current year has improved by 0.9% over the last 30 days.
The Mosaic Company’s (MOS - Free Report) acquisition of Vale Fertilizantes will help the company to capitalize on the rapidly growing Brazilian agricultural market. Mosaic should also benefit from its cost reduction measures and its efforts to boost production capacity.
Mosaic is down nearly 13% year to date. However, it has expected earnings growth of 14.4% for the current year. Moreover, the Zacks Consensus Estimate for the current year has improved by 3.8% over the last 30 days. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Western Union Co.’s (WU - Free Report) strategic investments in new products, services and technology are likely to pave the way for long-term growth. Relentless focus on expansion of customer base and creation of digital infrastructure to boost the electronic channels business should also fuel growth.
Western Union has lost 12.2% year to date. However, it has a Zacks Rank #2 (Buy). Moreover, it has expected earnings growth of 4.3% for the current year. Also, the Zacks Consensus Estimate for the current year has improved by 5.2% over the last 60 days.
Halliburton Company (HAL - Free Report) reported strong third quarter profit thanks to improved utilization and pricing gains in North America. In fact, Halliburton has used the challenges prevailing in the oil industry to its advantage, mainly by offering low cost solutions that aids producers in churning out more by investing less.
Halliburton has lost 11.2% year to date. However, it has a Zacks Rank #2. Moreover, expected earnings growth for the current year is more than 100%.
PPL Corporation (PPL - Free Report) is poised to gain from its capital investment plan, which primarily focuses on infrastructure construction projects for generation, transmission and distribution. It has reestablished its hedge levels to shield itself from any near-term decline in the GBP.
PPL Corp has lost 8.6% year to date. However, it has a Zacks Rank #2. Moreover, the Zacks Consensus Estimate for the current year has improved by 0.3% over the last 30 days.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Can the Worst S&P 500 Stocks of 2017 Rebound in 2018?
Markets have enjoyed a strong and enduring rally for nearly all of 2017. Benchmarks have broken several milestones on multiple occasions and are on course to create new annual records. Year to date, the S&P 500 is up more than 20% and is on course to registering its highest gains in four years. Successively strong earnings numbers and robust economic growth have been the primary factors powering these gains.
However, this extended market rally was not without its occasional losses. Lingering fears about inflated valuations have dogged stocks for some time now. Geopolitical concerns, particularly those related to North Korea also threatened to spoil the party on more than one occasion. Also, there was much hand wringing over the likelihood of tax cuts receiving legislative approval before they were finally signed into law last week.
However, it is increasingly likely that the actions of the new administration will boost stocks further in the days ahead. In such a scenario, S&P 500 stocks which have failed to chalk up gains this year should also stand a chance. This is particularly true for stocks with a strong Zacks Rank, which are well placed to ride the continuing market rally in 2018.
Factors which Acted as a Drag on 2017’s Rally
Even though benchmarks are now close to notching up annual records, a variety of factors have threatened to end their long running rally. Concerns about inflated valuations, particularly relating to tech stocks, have had investors worried on more than one occasion. Even though such fears have yet to come true, they continue to persist to this day.
Further, geopolitical concerns have also clouded market sentiment at times. Such worries were especially heightened during North Korea’s recent nuclear tests. Both South Korea and the U.S. government warned of a strong response during these events, leading to losses for stocks.
Coming to specific sectors, energy stocks remained depressed over the year with the Energy Select Sector SPDR (XLE) down 3.6% year to date. During the year, the OPEC and other major oil producers successfully adhered to an output control agreement which lent some support to oil prices. However, a step up in production by U.S. shale producers has led to the persistence of oversupply conditions.
Further, traditional safe haven sectors have been largely ignored during the year, with the Utilities Select Sector SPDR (XLU) up only 7.4% year to date. Instead, investors have favored high growth sectors such as technology in the quest for superlative gains. Industrywide changes have also acted as drags for specific stocks. For instance, the tendency to shop online has caused numerous store closures and created a near brick and mortar apocalypse.
Can Tax Cuts, Infrastructure Spending Boost Gains in 2018?
On last Friday, President Trump finally signed the much anticipated tax Bill into law. The exact earnings impact of the tax legislation is yet to become clear, but preliminary estimates suggest a material earnings boost. S&P 500 earnings in 2018 are already expected to be up 11.8%, with the growth pace expected to roughly double as a result of the tax legislation. (Read: What Will the Q4 Earnings Season Bring?)
And now that President Trump has scored his first major legislative victory, it is likely that he will press forward with another major issue on his agenda, infrastructure reforms. It is now widely expected that the Trump administration will announce a new infrastructure package in 2018.
During his presidential campaign, Trump had promised to implement a $1 trillion infrastructure package. This plan was intended to improve the state of roads, airports and bridges as well as other public works across the country.
Recently Trump has commented that his attempt to improve the country’s infrastructure will easily garner bipartisan support. The major obstacle to be overcome is related to funding and if that does happen, markets could receive yet another boost in the year ahead.
5 Losers Set to Gain in 2018
Even though stocks have notched up strong gains this year, some factors have acted as impediments to gains on several occasions. However, the projected impact of tax cuts and heightened prospects of a new infrastructure package are likely to sustain markets’ rally well into next year.
This is why it makes good sense to bet on those S&P 500 stocks which have taken a beating this year but stand a good chance of notching up gains in 2018. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.
Foot Locker (FL - Free Report) reported strong third-quarter fiscal 2017 results, wherein both the top and bottom lines beat the consensus mark. This led the stock to take a huge leap and outpace the industry in a month. Clearly, third-quarter results have given a fresh breath of life to the stock, which in the recent past had struggled on account of dismal performance in the preceding two quarters.
Foot Locker has lost 33.3% year to date. However, it has a Zacks Rank #1 (Strong Buy). Moreover, the Zacks Consensus Estimate for the current year has improved by 0.9% over the last 30 days.
(Looking for the Best Stocks for 2018? Be among the first to see our Top Ten Stocks for 2018 portfolio here.)
The Mosaic Company’s (MOS - Free Report) acquisition of Vale Fertilizantes will help the company to capitalize on the rapidly growing Brazilian agricultural market. Mosaic should also benefit from its cost reduction measures and its efforts to boost production capacity.
Mosaic is down nearly 13% year to date. However, it has expected earnings growth of 14.4% for the current year. Moreover, the Zacks Consensus Estimate for the current year has improved by 3.8% over the last 30 days. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Western Union Co.’s (WU - Free Report) strategic investments in new products, services and technology are likely to pave the way for long-term growth. Relentless focus on expansion of customer base and creation of digital infrastructure to boost the electronic channels business should also fuel growth.
Western Union has lost 12.2% year to date. However, it has a Zacks Rank #2 (Buy). Moreover, it has expected earnings growth of 4.3% for the current year. Also, the Zacks Consensus Estimate for the current year has improved by 5.2% over the last 60 days.
Halliburton Company (HAL - Free Report) reported strong third quarter profit thanks to improved utilization and pricing gains in North America. In fact, Halliburton has used the challenges prevailing in the oil industry to its advantage, mainly by offering low cost solutions that aids producers in churning out more by investing less.
Halliburton has lost 11.2% year to date. However, it has a Zacks Rank #2. Moreover, expected earnings growth for the current year is more than 100%.
PPL Corporation (PPL - Free Report) is poised to gain from its capital investment plan, which primarily focuses on infrastructure construction projects for generation, transmission and distribution. It has reestablished its hedge levels to shield itself from any near-term decline in the GBP.
PPL Corp has lost 8.6% year to date. However, it has a Zacks Rank #2. Moreover, the Zacks Consensus Estimate for the current year has improved by 0.3% over the last 30 days.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>