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In looking at this market and the chatter that surrounds it I see two distinct views.  There are those that are calling for a top, and those that want to hunt down and ruthlessly slaughter all the bears.  I am on the side of the market moving higher, and not that I want to hunt the shorts and kill the bears, I just want to find the best growth stocks out there.  That said, if there are some shorts that I have to step on along the way, so be it.

Putting cash to work with the market at all time high is always a tough thing to do.  Let’s face it when you are the one paying the price that will be another new record high, you could end up calling the top.  Then again, that scenario has happened countless times over the last 9 years so you may only hold the “bravdo” title for a moment or two before another investor comes along to pay more.  Of course the key is the reason for paying more, and if there is growth, then the reason is more often than not a valid one.

Well that is enough from me on my soap box, let’s get to some stock ideas to buy at the top of the market.  The first thing I want to do is get a list of the stocks that are seeing earnings estimate revisions higher.  The Zacks Rank does just that for me and when I select all the Zacks Rank #1 (Strong Buy) stocks I have already substantially narrowed down the list of stocks to buy.  The next thing I want to focus on is stocks with a growth style score of “A” as I want to be buying growth at the top, not value.

Follow Brian Bolan on Twitter: @BBolan1

The Fighting 46

There are 46 stocks that have a Zacks Rank #1 (Strong Buy) and a growth style score of “A” and I see a few chip related names right off the bat so I pretty much have to mention them.  I also see a specialty retailer, and just because that whole sector has been hammered of late it would be good to review that name as well.  Finally, I will touch on a stock that didn’t make the list but should be on your radar.

Applied Optoelectronics (AAOI - Free Report) was recently reviewed in a Zacks Rank Buy video.  The aggressive growth stock strategist at Zacks Investment Research reviewed why the stock was a Zacks Rank #1 (Strong Buy) and a quick look at the chart.  The video can be seen below.

Ichor Holdings (ICHR - Free Report) is also reviewed in the video below.  I particularly like the 11x forward multiple for this stock along with the outstanding growth in earnings estimates.  This stock is in the semi conductor capital equipment space, and it tends to move a little ahead of the other broader chip plays.

MKS Instruments (MKSI - Free Report) saw a great month of April but has traded in a tight range for May.  Could June see another leg higher for this stock?  I like that idea as it has a lot going for it, including a Zacks Rank #1 (Strong Buy) and a growth style score of “A.”   At 16x forward earnings the value investor in you shouldn’t stop you from buying this stock that reached a new 52 week high today at $85.00.

Specialty Retailer

Given what we have seen from several department stores and other retailers this year, it is hard to imagine that specialty retailer made this list.  It tells me that this stock is bucking the trend and that alone will get portfolio managers interested in the name.  When you have to have a percentage of your funds invested in the retail space, you tend to overweight the names that are doing the best.  This is just that type of stocks.

Big Five Sporting Goods (BGFV - Free Report) is a Zacks Rank #1 (Strong Buy) and carries a growth style score of “A” but is a healthy distance from hitting a new 52 week high today.  I see the stock at about $14, and that is well below the $20.35  52 week high.  I see a solid beat at the start of the month, but the stock was punished with the rest of the group as the retail sector was thrashed.  If you are looking for a “bottom fishing” style play at the top, this would be a good one. 

 

 

Deal Radar

The other week we heard that private equity was looking at making a play for Web.com (WEB - Free Report) .  This is a Zacks Rank #3 (Hold) with a growth style score of “C” so why am I talking about it here? Well the deal speculation is still out there even in volume is not.  I see about 160K shares traded so far today, and that is well below the normal amount.  In fact, volume has dropped off somewhat significantly since the news broke that a deal could be around the corner.

I looked deeper into the story and I think it makes sense that private equity concerns would want to buy this company.  There are a few groups that have a high degree of expertise in the in space and the fact is that WEB is seeing minimal growth right now.  That said, an above average ARPU and solid revenue run rate tells me that there is good potential here.  One analyst has suggested that $30 could be the number that gets the deal done, but after I kicked the tires, I wouldn’t be surprised by a $28 price.

 

 

Keep in mind this important piece of the puzzle.  Volume spiked on the story of the deal, but has dropped off significantly since then. What hasn’t dropped off is the price, as this stock hit a new 52 week high of $23.65 today amid more low volume.  This tells me that holders are not willing to give up their shares which only makes the deal rumor that much strong.  Deals like then tend to get announced on a Monday… so being long this stock over the weekend isn’t a bad idea even with the market at the top.

Follow Brian Bolan on Twitter: @BBolan1



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