Sometimes you don’t really have a plan. You’re really looking to play safe, no matter what. And if there’s nothing safe out there, you’d rather stay put, hanging on to what you deem valuable and taking gains on what you consider risky.

And a quick look at what earnings season has to offer this week shows mainly bank stocks telling a foretold tale about easy comps and taking down reserves. Of course, there could be news on the interest rate front, but it doesn’t look like there’s anything majorly exciting out there.

And if you think about wading into the following week, there’s more variety and more earnings beat possibilities, but the easy comps remain a big part of it.

On the other hand, the uncertainty on account of inflation, rate hikes, supply chain issues, labor problems, etc have made investors incrementally jittery, although printed numbers and outlooks continue to paint a rosy picture. So this could be another quarter in which investors decide to sell the news rather than buy.

So a little bit of caution seems to be in order.

This may be the just the right time to ask yourself the same old question about why you want to buy anything anyway. Because no matter what’s happening in the market and with the Fed and all the other things, investment decisions essentially depend upon your personal goals. And these could be long-term, medium-term or near-term.

If you’re thinking long-term, you need an innovative company with a strong portfolio that hasn’t been fully monetized. You’re looking for a company that has some kind of differentiating factor that can help it deal with competition. You’re probably looking for something tech, provided the valuation permits.

If you’re thinking medium term, you’re probably looking at a situation where a certain level of normalcy has returned. A situation where bars and restaurants are back in business and more employees are working from office. You’re probably considering the retail or commercial segments.

And if you’re thinking near-term, you’re looking at stocks that are particularly well positioned to capitalize on the peculiar conditions the pandemic has thrown at us. This could be tech again, or auto, or construction.

There could be so many other ways of slicing it, given the many complexities within each segment, as also the peculiarities of each of the players. But I’ve found that it really pays to identify strong industries before taking an investment decision. Because there’s invariably a number of factors within an industry that are either working in its favor or against it. And this could help us narrow down our choices.

It’s also a good idea to see what the experts are saying. Brokers often have field teams that are actually going into the supply chain, talking with suppliers, customers as well as management, and building their models accordingly. So if they’re strongly bullish on anything, there’s probably a good reason for it. Just make sure that you’re looking at a reasonable consensus. Because if there are less than three brokers in the average rating, it really isn’t much of a poll.

Another thing that might be worth checking is an increase in prices (say 5% or more) within the past few days, say the past week or so. Even if there has been no estimate revision triggering the increase, there could be other reasons for cheer. And any of these reasons could have longer-term implications as well.

Take Asbury Automotive Group, Inc. (ABG Quick QuoteABG - Free Report) for instance. The auto retailer had two encouraging announcements of late. One was to do with the appointment of Michael Welch as CFO. Welch is a CPA with 20 years’ experience in auto retail (financial management, treasury, accounting, and auditing). Some of that experience was earned at leading auto retailer Group 1 Automotive, where he served as a VP and Corporate Controller.

The other piece of news was the enhancement of its digital ordering platform Clicklane by integrating Salty’s Software-as-a-Service (SaaS) insurance offering. The company estimates that its customers spend around $350 million on insurance every year, which they can now buy right on Clicklane itself.

So it seems that there was good reason for the 5.6% increase in the share price over the past week.

Since the Automotive - Retail and Whole Sales industry, to which ABG belongs, is at the top 2% of Zacks-classified industries and the stock itself has a Zacks #2 (Buy) rank, the shares look like a safe bet. They also have a value-growth-momentum (VGM) Score of A, which means that they should appeal to every kind of investor.

And checking with the experts, I find that seven brokers have an average rating of 1.64 (equivalent Buy) on the stock, which further increases confidence.

However, we should also consider the valuation because it isn’t a good idea to buy expensive stocks in an uncertain environment. On this front, ABG’s 10.9X P/E multiple, while close to its median value of 10.1X over the past year, remains well below the 22.2X for the S&P 500 and the 16X average for our universe.

Another stock within the same industry that looks equally attractive is Group 1 Automotive, Inc. (GPI Quick QuoteGPI - Free Report) . Not only do the shares have a Zacks Rank #1 (Strong Buy) rating and VGM Score A, but they are also recommended by the experts. An average rating from six brokers stands at 1.08 (equivalent Strong Buy).

GPI shares are up 7.3% in the last week. Let’s find out why. As may be expected when there’s such a substantial increase, I’m seeing a significant raising of estimates. So the Zacks Consensus Estimate for 2021 is up $1.70 (8.0%) during this period while the 2022 estimate is up 50 cents (2.4%).

The estimate revisions came on the back of preliminary results for the second quarter wherein the company said it was expecting an EPS of $10.20 to $10.70 when the Zacks Consensus was sitting at $5.48. The Q2 Zacks Consensus is currently $6.62, so further increases appear imminent.

Despite the price appreciation, the stock trades at a 8.0X P/E, which is below its median value over the past year and the S&P 500.

The Transportation – Truck industry has been a big beneficiary of pandemic-related supply chain disruptions, as well as resurgent demand. As a result, the industry occupies a position in the top 13% of Zacks-classified industries. One company that has successfully capitalized on the situation is ArcBest Corp. (ARCB Quick QuoteARCB - Free Report) .

The Zacks #1 ranked stock with a VGM Score of A has also found favor among brokers. So right now, nine analysts have collectively allotted a rating of 1.28 (equivalent Strong Buy) to the shares.

The shares are up 5.3% over the past week, in response to upwardly moving estimates: 5 cents for 2021 and 3 cents for 2022.

ARCB shares are valued at an 11.5C P/E, which is low, both with respect to the S&P 500 and our coverage universe. They’re also quite a bit lower than their own median value of 13.1X over the past year.

IBEX Ltd. (IBEX Quick QuoteIBEX - Free Report) offers customer support, technical support, inbound/outbound sales, business intelligence and analytics, digital demand generation, customer experience (CX) surveys and feedback analytics services to companies that outsource such requirements to third-party providers.

A member of the Business – Services industry (top 33%), the stock carries a #2 rank and VGM Score B. Five analysts have provided an average rating of 1.20 (equivalent Strong Buy), indicating that they are quite bullish on the stock.

Last month, analysts adjusted their estimates slightly lower, sending the shares down. But since the estimates remain on an upward trajectory, the shares have bounced back up since then. They were up 5.0% in the last week.

At a 14.7X P/E, the shares are cheaper than the S&P 500 and are also trading below their median value of 16.2X over the past year.

#1 ranked SMART Global Holdings, Inc. (SGH Quick QuoteSGH - Free Report) is a designer, manufacturer and supplier of electronic subsystems to OEMs in the computer, industrial, networking, telecommunications, aerospace and defense markets. The shares carry a VGM Score A and belong to the Electronics – Semiconductors industry (top 41%).

Five brokers have an average rating of 1.20 on the stock, indicating a strongly bullish sentiment.

Following strong third-quarter results on Jul 6, analysts raised their estimates for 2021 and 2022 (ending August). The 2021 estimate jumped 45 cents (10.7%) while the 2022 estimates jumped 46 cents (8.7%).

The shares initially jumped in reaction to the news but immediately gave back some of their gains. The current valuation of just 9.6X is cheap with respect to its performance over the past year as well as S&P 500 and our coverage universe.

One-Month Price Performance

Image Source: Zacks Investment Research