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Do Not Fight this Market: 3 Top Ranked Stock to Join the Rally
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After such a strong finish in 2023 and follow through at the start of 2024, investors are wondering when the correction is coming. While it is natural to expect some sort of pull-back I think investors would be best off not trying to predict, and instead continue buying top-ranked stocks.
Below we can see the Nasdaq 100 is breaking out of this bullish looking consolidation, and the S&P 500 is very nearly pushing through the 5,000 level.
Image Source: TradingView
Furthermore, there are many powerful investment themes keeping the markets bid, including a robust economy, exciting technological developments, and tremendous government spending deficits. That last item is definitely worth considering when wondering when the economy is going to slowdown.
Because of the massive spending behind the most recent infrastructure bill, where more than $1 trillion is going to be spent, many laid off workers are likely to be soaked up by the public sector, and spending to continue.
Based on these influential economic developments, investors should focus on continuing to buy leading stocks with top Zacks ranks, because a major economic slowdown is becoming less and less likely.
Here I will share three stocks with top Zacks ranks, and market beating performance over the last month. I particularly like to look for stocks showing relative strength while the market continues to grind higher.
Image Source: Zacks Investment Research
MercadoLibre
MercadoLibre (MELI - Free Report) , is the Latin-American version of Amazon, building an e-commerce platform that continues to boom in popularity. MercadoLibre has been one of the most exciting stocks in the last few years and its returns continue to delight investors willing to own shares.
In addition to a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions, the company is forecasting impressive growth in sales and earnings.
This year, sales are expected to climb 36% YoY to $14.3 billion, while EPS are set to expand 134% to $22.30 per share. That growth is projected to continue on to the next year as well, with sales expected to grow 22.3% the following year, and EPS to increase 57.6%.
Image Source: Zacks Investment Research
In addition to the fundamental developments in MercadoLibre, its technical advances are compelling as well. In addition to relative strength against the market, it has been forming a very nice technical trade pattern to measure a breakout trade from.
For investors waiting for a technical signal to enter MELI, a move above $1764 would market a clean breakout from this bullish consolidation.
Image Source: TradingView
StoneCo
StoneCo (STNE - Free Report) is a Brazilian financial technology company specializing in payment processing solutions. Founded in 2012, StoneCo provides a range of services, including electronic payments, credit card processing, and point-of-sale technology for businesses of varying sizes.
StoneCo has seen earnings estimates steadily trend higher over the last 10 months, giving it a Zacks Rank #1 (Strong Buy) rating. Additionally, the company is entering a period where EPS are expected to expand significantly. Earnings are forecast to grow 167% YoY this year, and 36.1% next year.
Image Source: Zacks Investment Research
Like MercadoLibre, StoneCo stock is forming a convincing technical pattern. STNE stock was hit hard at the end of 2022 and traded sideways at a depressed level for nearly two years.
However, at the end of 2023, the stock initiated a stage one breakout, indicating investors had been buying the depressed stock. Now over the last two months, STNE price action has built out a weekly bull flag, leading me to believe another big breakout is coming.
If STNE stock trades above the $18.50 level, investors could rush in to buy the stock sending it significantly higher.
Image Source: TradingView
Amazon.com
Finally, one of the world's leading companies, Amazon (AMZN - Free Report) just reported an incredibly strong quarter of financials sending the stock much higher.
Following the earnings gap up, Amazon stock is forming a post earnings consolidation, a very high probability trading setup. Above $171 and AMZN should make a run at its all-time high.
Image Source: TradingView
Amazon has also been garnering interest from analysts, who have been steadily upgrading earnings estimates. Current quarter earnings have been revised higher by 22% and current quarter earnings by 12.5%.
Earnings at the e-commerce and technology giant are expected to grow by an impressive 28.1% annually over the next 3-5 years, driven by its AWS and new advertising business segments.
Image Source: Zacks Investment Research
Bottom Line
The great thing about investing in stocks is that the best ones offer tremendous asymmetric opportunities. There is no reason to try and predict market selloffs, because so long as you focus on buying top-tier securities, the returns take care of themselves. That is not to say that risk management isn’t key, but good investors are often optimists.
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Do Not Fight this Market: 3 Top Ranked Stock to Join the Rally
After such a strong finish in 2023 and follow through at the start of 2024, investors are wondering when the correction is coming. While it is natural to expect some sort of pull-back I think investors would be best off not trying to predict, and instead continue buying top-ranked stocks.
Below we can see the Nasdaq 100 is breaking out of this bullish looking consolidation, and the S&P 500 is very nearly pushing through the 5,000 level.
Image Source: TradingView
Furthermore, there are many powerful investment themes keeping the markets bid, including a robust economy, exciting technological developments, and tremendous government spending deficits. That last item is definitely worth considering when wondering when the economy is going to slowdown.
Because of the massive spending behind the most recent infrastructure bill, where more than $1 trillion is going to be spent, many laid off workers are likely to be soaked up by the public sector, and spending to continue.
Based on these influential economic developments, investors should focus on continuing to buy leading stocks with top Zacks ranks, because a major economic slowdown is becoming less and less likely.
Here I will share three stocks with top Zacks ranks, and market beating performance over the last month. I particularly like to look for stocks showing relative strength while the market continues to grind higher.
Image Source: Zacks Investment Research
MercadoLibre
MercadoLibre (MELI - Free Report) , is the Latin-American version of Amazon, building an e-commerce platform that continues to boom in popularity. MercadoLibre has been one of the most exciting stocks in the last few years and its returns continue to delight investors willing to own shares.
In addition to a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions, the company is forecasting impressive growth in sales and earnings.
This year, sales are expected to climb 36% YoY to $14.3 billion, while EPS are set to expand 134% to $22.30 per share. That growth is projected to continue on to the next year as well, with sales expected to grow 22.3% the following year, and EPS to increase 57.6%.
Image Source: Zacks Investment Research
In addition to the fundamental developments in MercadoLibre, its technical advances are compelling as well. In addition to relative strength against the market, it has been forming a very nice technical trade pattern to measure a breakout trade from.
For investors waiting for a technical signal to enter MELI, a move above $1764 would market a clean breakout from this bullish consolidation.
Image Source: TradingView
StoneCo
StoneCo (STNE - Free Report) is a Brazilian financial technology company specializing in payment processing solutions. Founded in 2012, StoneCo provides a range of services, including electronic payments, credit card processing, and point-of-sale technology for businesses of varying sizes.
StoneCo has seen earnings estimates steadily trend higher over the last 10 months, giving it a Zacks Rank #1 (Strong Buy) rating. Additionally, the company is entering a period where EPS are expected to expand significantly. Earnings are forecast to grow 167% YoY this year, and 36.1% next year.
Image Source: Zacks Investment Research
Like MercadoLibre, StoneCo stock is forming a convincing technical pattern. STNE stock was hit hard at the end of 2022 and traded sideways at a depressed level for nearly two years.
However, at the end of 2023, the stock initiated a stage one breakout, indicating investors had been buying the depressed stock. Now over the last two months, STNE price action has built out a weekly bull flag, leading me to believe another big breakout is coming.
If STNE stock trades above the $18.50 level, investors could rush in to buy the stock sending it significantly higher.
Image Source: TradingView
Amazon.com
Finally, one of the world's leading companies, Amazon (AMZN - Free Report) just reported an incredibly strong quarter of financials sending the stock much higher.
Following the earnings gap up, Amazon stock is forming a post earnings consolidation, a very high probability trading setup. Above $171 and AMZN should make a run at its all-time high.
Image Source: TradingView
Amazon has also been garnering interest from analysts, who have been steadily upgrading earnings estimates. Current quarter earnings have been revised higher by 22% and current quarter earnings by 12.5%.
Earnings at the e-commerce and technology giant are expected to grow by an impressive 28.1% annually over the next 3-5 years, driven by its AWS and new advertising business segments.
Image Source: Zacks Investment Research
Bottom Line
The great thing about investing in stocks is that the best ones offer tremendous asymmetric opportunities. There is no reason to try and predict market selloffs, because so long as you focus on buying top-tier securities, the returns take care of themselves. That is not to say that risk management isn’t key, but good investors are often optimists.