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Q3 Earnings Revive Wall Street's Fortunes: 5 Value Picks
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Last week, the Dow and the S&P 500 posted gains for the first time in what has been a bleak October for equity markets. In doing so, both indexes ended a three-week long stretch of losses. The Dow’s increase over last week was considerably better than the S&P 500, which only eked out gains. Bullish earnings were the sole reason for these advances.
Currently, earnings are the only factor boosting stocks higher. Rising interest rates and the fallout of trade tensions have been plaguing investors for most of this month. But a section of analysts thinks that apart from solid earnings, America’s economic moorings remain firm. Buying select value choices on the dip, therefore, remains a smart option.
Earnings Help Dow, S&P Post Weekly Gains
On Oct 19, the Dow gained 0.3% even as the S&P 500 dipped marginally and the Nasdaq closed in the red. Spectacular quarterly sales from Procter and Gamble (PG - Free Report) were primarily what powered the blue-chip index to finish in the green. This also helped the Dow to post a weekly advance of 0.4%.
The S&P 500 failed to close in the black at the end of the trading session. However, it still managed to post a weekly increase. The Nasdaq wasn’t as lucky, closing in the red for the third consecutive session and losing 0.6% over last week.
October has lived up to its reputation for being a historically volatile month for stocks. For instance, the Dow surged more than 2% on Oct 16 on strong economic data and impressive earnings number from Goldman Sachs (GS - Free Report) . However, geopolitical tensions led to the blue-chip index plunging 1.3% on Oct 18 after another volatile trading session.
Bullish Earnings, Strong Economy to Boost Stocks
Apart from the sharp decline in existing home sales, most economic data released last week has been bullish. Reports on industrial production, job openings and homebuilder confidence released were particularly encouraging. With America’s economic basis remaining strong, recent market reverses are unlikely to last for an extended period.
Also, as of Oct 19, Q3 results were available from 84 S&P 500 members, or 16.8% of the index’s total membership, that combined account for 22.3% of the index’s total market capitalization.
Total earnings for these 84 companies are up 19.2% from the same period last year on 8.4% higher revenues, with 82.1% beating EPS estimates and 61.9% beating revenue estimates.
Combining the actual results for the 84 companies with estimates for the still-to-come 416 index members, total S&P 500 earnings are expected to be up 19.2% from the same period last year on 7.2% higher revenues. (Read: Are Q3 Earnings Results Really Good?)
Our Choices
A large section of investors think that one major factor which will fuel future gains for investors are strong earnings numbers. When considered alongside a strong economy, this factor clearly indicates that the current downturn is nothing but an opportunity for investors to buy on the dip.
This is why it makes sense to pick up select value stocks on the dip. Our selection is backed by a Zacks Rank #1 (Strong Buy) and a Zacks Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.
We narrowed down our choices with the help of our new Style Score System.
Our research shows that stocks with a Value Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities in the value-investing space.
Equinor ASA (EQNR - Free Report) , formerly known as Statoil ASA, operates as an energy company. It is engaged in developing oil, gas, wind and solar energy projects and focuses on offshore operations and exploration services.
Equinor’s forward price-to-earnings ratio (P/E) for the current financial year (F1) is 12.13, lower than the industry average of 14.57. It has a PEG ratio of 0.78, lower than the industry average of 1.31.
Atkore International Group Inc. (ATKR - Free Report) manufactures and distributes electrical raceway products.
Atkore International has a P/E (F1) of 7.78x, lower than the industry average of 9.77. It has a PEG ratio of 0.78, lower than the industry average of 1.19.
RH (RH - Free Report) , formerly known as Restoration Hardware, is a leading luxury retailer in the home furnishing space.
RH has a PEG ratio of 0.63, lower than the industry average of 0.84.
Vishay Intertechnology, Inc. (VSH - Free Report) is a global manufacturer and supplier of semiconductors and passive components.
Vishay Intertechnology has a P/E (F1) of 8.93x, lower than the industry average of 10.08.
Eni SpA-ADR (E - Free Report) is among the leading integrated energy players in the world.
Eni SpA has a PEG ratio of 0.66, lower than the industry average of 1.12.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Q3 Earnings Revive Wall Street's Fortunes: 5 Value Picks
Last week, the Dow and the S&P 500 posted gains for the first time in what has been a bleak October for equity markets. In doing so, both indexes ended a three-week long stretch of losses. The Dow’s increase over last week was considerably better than the S&P 500, which only eked out gains. Bullish earnings were the sole reason for these advances.
Currently, earnings are the only factor boosting stocks higher. Rising interest rates and the fallout of trade tensions have been plaguing investors for most of this month. But a section of analysts thinks that apart from solid earnings, America’s economic moorings remain firm. Buying select value choices on the dip, therefore, remains a smart option.
Earnings Help Dow, S&P Post Weekly Gains
On Oct 19, the Dow gained 0.3% even as the S&P 500 dipped marginally and the Nasdaq closed in the red. Spectacular quarterly sales from Procter and Gamble (PG - Free Report) were primarily what powered the blue-chip index to finish in the green. This also helped the Dow to post a weekly advance of 0.4%.
The S&P 500 failed to close in the black at the end of the trading session. However, it still managed to post a weekly increase. The Nasdaq wasn’t as lucky, closing in the red for the third consecutive session and losing 0.6% over last week.
October has lived up to its reputation for being a historically volatile month for stocks. For instance, the Dow surged more than 2% on Oct 16 on strong economic data and impressive earnings number from Goldman Sachs (GS - Free Report) . However, geopolitical tensions led to the blue-chip index plunging 1.3% on Oct 18 after another volatile trading session.
Bullish Earnings, Strong Economy to Boost Stocks
Apart from the sharp decline in existing home sales, most economic data released last week has been bullish. Reports on industrial production, job openings and homebuilder confidence released were particularly encouraging. With America’s economic basis remaining strong, recent market reverses are unlikely to last for an extended period.
Also, as of Oct 19, Q3 results were available from 84 S&P 500 members, or 16.8% of the index’s total membership, that combined account for 22.3% of the index’s total market capitalization.
Total earnings for these 84 companies are up 19.2% from the same period last year on 8.4% higher revenues, with 82.1% beating EPS estimates and 61.9% beating revenue estimates.
Combining the actual results for the 84 companies with estimates for the still-to-come 416 index members, total S&P 500 earnings are expected to be up 19.2% from the same period last year on 7.2% higher revenues. (Read: Are Q3 Earnings Results Really Good?)
Our Choices
A large section of investors think that one major factor which will fuel future gains for investors are strong earnings numbers. When considered alongside a strong economy, this factor clearly indicates that the current downturn is nothing but an opportunity for investors to buy on the dip.
This is why it makes sense to pick up select value stocks on the dip. Our selection is backed by a Zacks Rank #1 (Strong Buy) and a Zacks Value Score of A. You can see the complete list of today's Zacks #1 Rank stocks here.
We narrowed down our choices with the help of our new Style Score System.
Our research shows that stocks with a Value Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities in the value-investing space.
Equinor ASA (EQNR - Free Report) , formerly known as Statoil ASA, operates as an energy company. It is engaged in developing oil, gas, wind and solar energy projects and focuses on offshore operations and exploration services.
Equinor’s forward price-to-earnings ratio (P/E) for the current financial year (F1) is 12.13, lower than the industry average of 14.57. It has a PEG ratio of 0.78, lower than the industry average of 1.31.
Atkore International Group Inc. (ATKR - Free Report) manufactures and distributes electrical raceway products.
Atkore International has a P/E (F1) of 7.78x, lower than the industry average of 9.77. It has a PEG ratio of 0.78, lower than the industry average of 1.19.
RH (RH - Free Report) , formerly known as Restoration Hardware, is a leading luxury retailer in the home furnishing space.
RH has a PEG ratio of 0.63, lower than the industry average of 0.84.
Vishay Intertechnology, Inc. (VSH - Free Report) is a global manufacturer and supplier of semiconductors and passive components.
Vishay Intertechnology has a P/E (F1) of 8.93x, lower than the industry average of 10.08.
Eni SpA-ADR (E - Free Report) is among the leading integrated energy players in the world.
Eni SpA has a PEG ratio of 0.66, lower than the industry average of 1.12.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>