Nobody likes to see the market plunge like it’s doing today, but such slides do perform important functions. For a market in the midst of an epic bull run that making new highs regularly, it’s a chance for investors to pick up shares of proven winners at discount prices.
Zacks has plenty of screens that can help you take advantage of a pullback, but today we’re’ focused on the Zacks #1 Rank Uptrends screen. The stocks that pass these parameters are strong buys that are approaching or at their 52-week highs. Remember, a stock reaching historic peaks does not mean it’s running out of gas, especially when pullbacks like today’s refresh chances for new highs.
Below are three stocks that have passed this screen’s criteria. They are Strong Buys that are outpacing the market. Make sure to click on the screen above to learn about the parameters and see the full list of 30 names.
Caterpillar (CAT - Free Report)
It’s impossible to have any type of momentum screen right now without Caterpillar (CAT - Free Report) . This construction and mining equipment giant has jumped approximately 26.7% year to date, which means it is bettering the 24.2% gain of its highly-ranked industry (manufacturing – construction & mining is in the top 14% of the Zacks Industry Rank with the 37th spot out of 256).
Plus, last month CAT reported its 10th straight positive surprise and the 14th beat out of the last 15 quarters. And it has achieved all this without any infrastructure spending from the government, which was expected from the new Trump administration and is still eagerly awaited.
Second-quarter earnings per share of $1.49 beat the Zacks Consensus Estimate by 18.25% and completed a four-quarter average beat of more than 41%. Revenues of $11.3 billion also topped our expectations of $10.9 billion. Earnings and revenues also advanced 37% and 9.6%, respectively, on a year over year basis. The company is enjoying higher end-user demand for construction equipment both here and abroad. In fact, it ended the quarter with a backlog of $14.8 billion, marking a year-over-year improvement of $3 billion.
With such a strong second quarter and first half performance, CAT felt comfortable enough to raise its guidance for the year. It now expects revenue between $42 billion and $44 billion, compared to its previous estimate of $38 billion to $41 billion. Earnings per share should now reach $5.00 instead of just $3.75.
All nine analysts responded to the quarter and the guidance by boosting their earnings estimates for this year and next. The Zacks Consensus Estimate for this year is now at $5.22 per share, marking a surge of 26% in just the past 30 days. Earnings are expected to jump a further 27% in 2018 to $6.63, which is also up 27% in the past 30 days.
E*Trade Financial Corporation (ETFC - Free Report)
Consumers seems to be buying everything online these days…and stocks are no exception. When you add the second-longest bull run in history to the equation, you can see why this might be the golden age for online brokerages. The second-quarter report for E*Trade Financial Corporation (ETFC - Free Report) is a great example. It’s great to see the company beat expectations on both the top and bottom lines, but the real encouraging stuff is just below the headlines.
In the quarter, daily average revenue trades (DARTs) soared 37% year over year, while customer accounts increased 6% to 5.3 million. According to the company, the direct space now accounts for more than 20% of the total brokerage industry, and it’s just getting started.
In the second quarter, ETFC announced its eighth straight positive surprise when earnings per share of 52 cents beat the Zacks Consensus Estimate by 8.3%. The past four quarters have accounted for an average beat of 17%. Due to strong customer activity, net revenue of $577 also beat Zacks expectations of $554.3 million while also improving from last year by nearly 22%.
Due to the quarterly report, the past 30 days have seen a lot of improvement for earnings estimates. The Zacks Consensus Estimate for this year is now at $2.19 per share, marking an 11.7% improvement as seven of eight covering analysts boosted their expectations. Earnings are expected to climb a further 10.5% next year to $2.42, which has gained 6.1% in the past month.
Looking toward the second half of the year, ETFC outlined three critical initiatives: completing the integration of OptionsHouse, continuing to grow its balance sheet and a $1 billion share repurchase program made possible by its strong financial performance.
Cognex Corporation (CGNX - Free Report)
There’s an old saying that goes: “seeing is believing”. Well, Cognex Corporation (CGNX - Free Report) is proving that seeing is also extremely profitable. The company provides machine vision technology, such as barcode readers, and last week it reported the highest quarterly revenue in its history.
Thanks to growth across the broad factory automation market, CGNX reported revenues of $172.9 million in its second quarter. The result was 17% better than last year and ahead of the Zacks Consensus Estimate. The company is enjoying strong demand across a broad range of markets, which is expected to lift revenue to between $250 million and $260 million in the current quarter.
Earnings per share in the quarter came to 63 cents per share, beating the Zacks Consensus Estimate by more than 14.5% while marking the seventh straight positive surprise. Over the past four quarters, CGNX has amassed an average beat of nearly 19.5%.
The company is part of the Electronics – testing equipment industry, which is in the top 2% of the Zacks Industry Rank with the 6th spot out of 256. The space is up nearly 32% year to date. Just being part of this group is a big plus for investors, but the most impressive aspect is that CGNX has easily outperformed its group by soaring more than 58% so far this year.
Analysts like what they see and have boosted their estimates in the past 30 days. The Zacks Consensus Estimate for this year has climbed 17.2% in that time to $2.45 per share. Our expectations for next year are currently $2.64, suggesting a year-over-year improvement of 7.8%. Over the past month, the consensus has increased 11.4%.
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