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You Can Beat The Market, Even In Times Like This

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After a fantastic year of gains in 2021, this year couldn’t have started out any worse.

In fact, it’s shaping up to be the worst first half in 50 years.

First, rising inflation (41-year high), spooked the market.

Then the war on Ukraine, which exacerbated already high energy prices, weighed on stocks even more.

High inflation, of course, has prompted the Fed to raise rates (they hiked rates by 25 basis points in March, 50 basis points in May, 75 basis points in June, and they are on pace for another 50-75 basis points in July). And by year’s end, rates are expected to be at 3.4%.

While the increase in rates will help tamp down inflation, which in turn will benefit the economy, there’s also a fear that increasing rates too high and too fast could cause a recession.

It should be noted that Fed Chair, Jerome Powell, just the other week, said that ‘the American economy is very strong and well positioned to handle tighter monetary policy.’

The Fed also estimates GDP to come in at 1.7% this year, and 1.7% again next year.

That sentiment was echoed by St. Louis Fed President, James Bullard, in an interview earlier this month, when he said he does not see a recession this year or next. And that he sees a “pretty good second half,” driven by “strong consumption this year.”

So the Fed’s forecast is for growth, not recession.

Nonetheless, those fears persist, hence the sell-off.

Even so, there are plenty of investors beating the market.

But too many are underperforming.

One of the reasons why so many people are not seeing the kinds of returns they want is because they don’t know of new stocks to get into. They find themselves in mediocre stocks because they don’t know of anything better instead.

I think for some, their knowledge or ‘universe’ of familiar stocks is relatively small and this limits their opportunity of getting into better ones.

Underperformers 

More than half of the companies in the S&P are beating the index, with more than 20% of the companies showing positive returns this year.

But that means nearly half of the stocks in the S&P are underperforming the Index, with nearly 80% showing a negative return.

Even ‘good’ companies like Starbucks; they’re down -33.6%. Or Meta Platforms (i.e., Facebook); which is down -49.6%. Or Netflix; down -68.6%. So what gives?

I don’t single these out so you can feel bad if you have them. But instead, to stop and think about ‘why’ you have them.

Nobody invests so they can underperform the market. But if you are – why? You don’t have to. If you’re underperforming the market, that means you have more of these types of laggards in your portfolio than leaders.

How the Other Half Lives

Of course, there are a lot of big names beating the S&P too. Take Northrop Grumman, or Merck, or Marathon Oil for example. All are outperforming the S&P with gains of +20%, +23% and +41% respectively.

But now let’s move outside of the S&P.

Did you ever hear of a company called Delek? What if you did? It has outperformed the market by gaining +85.8% since the start of the year. Or Lantheus? They’re up +127%. Or Alpha Metallurgical? Up by +133%. (By the way, these are all Zacks Rank #1 stocks.)

There are hundreds and hundreds of stocks producing fantastic gains that many people may never have even heard of.

What about you? How many times have you heard about a stock or read about a stock that skyrocketed -- only to think to yourself; “if only I knew about that stock ahead of time, I would have been in that.”

Continued . . .

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Just Released: 4 Stocks for Biggest Upside in Q3

Four Zacks experts each announce their single favorite stock to gain the most in the next three months:

Stock #1: Earnings soared +128.45 in 90 Days. Closing Acquisition in Market’s Hottest Sector 

Stock #2: Agribusiness Giant Addresses Global Food Shortage and Rides Surging Prices 

Stock #3: Small-Cap Shipper Is a Compelling Play as Europe Moves Away from Russian Natural Gas 

Stock #4: Record Sales Growth for Automotive Supplier as People Fix Cars Rather Than Buy New Ones

Today, you are invited to download the private Ultimate Four Special Report that names these stocks and spotlights why their gain potential is so exceptional.

See Stocks Now >>

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Expand Your Universe and Pick Better Stocks 

Increasing your knowledge and awareness of new and better stocks is easier than you think. And you don’t have to reinvent the wheel.

For example, did you know that stocks with a Zacks Rank #1 Strong Buy have beaten the market in 28 of the last 34 years (an 82% win ratio), with an average annual return of 25% per year? That's more than 2 x the S&P. And consistently beating the market year after year can add up to a lot more than just two times the returns.

And did you know that stocks in the top 50% of Zacks Ranked Industries outperform those in the bottom 50% by a factor of 2 to 1? There's a reason why they say that half of a stock's price movement can be attributed to the group that it's in. Because it's true!

Those two things will give any investor a huge probability of success and put you well on your way to beating the market.

But you’re not there yet, as those two items alone will only narrow down a field of 10,000 stocks to the top 100 or so. Way too many to trade at once.

So the next step is to get that list down to the best 5-10 stocks that you can buy.

Stock Picking Secrets of the Pros

One of the best ways to begin picking better stocks is to see what the pros are doing – the pros who use these methods to select the best stocks to buy.

Whether you’re a growth investor, or a value investor, prefer fast-paced momentum stocks, or mature dividend-paying income stocks, there are certain rules the experts follow to maximize their gains.

This applies to large-caps and small-caps, biotech and high-tech, ETF’s, stocks under $10, stocks about to surprise, even options, and everything in between.

Regardless of which one fits your personal style of trade, just be sure you’re following proven profitable methods that work, from experts who have demonstrated their ability to beat the market.

The best part about these strategies is that all of the hard work is done for you. There’s no guesswork involved. Just follow the experts and start getting into better stocks on your very next trade.

New Market Leaders

For most of us, our investments are the largest, most important chunk of money we’ll ever be responsible for in our entire life.

And if it isn’t now, it likely will be one day.

The leaders in the past (stock names we’re all too familiar with), will likely not be the leaders in the future.

But you can stay ahead of the pack by following some simple rules and methods that have proven to work.

And don’t be afraid to consider a stock you may never have heard of before. There was a time when some of the best stocks in your portfolio today were brand new to you before you bought them. And now they’re one of your top performers.

The next time you read about or hear about a stock that’s skyrocketed in price; instead of thinking, ‘I could have been in that had I known about it’ – wouldn’t it be great to say, “I’m in it!” 

An Easy Reset for Your Portfolio

Download our just-released Ultimate Four Special Report.

It names and explains 4 stocks with strong fundamentals that are hand-picked by our experts to have the biggest upsides for Q3.

And despite inflation there couldn’t be a better time to get aboard because stocks are substantially undervalued as the U.S. economy holds strong. Pent-up consumer demand continues to unleash, household income is high, corporate earnings are thriving, and the job market is booming.

In particular, these 4 stocks are riding trends that could prove very lucrative for investors . . . 

Stock #1: Looking for a powerhouse in energy, the market’s best-performing sector? This one is a rare combo of growth and value. Recently, earnings soared +128.4% in just 90 days! They’re closing a major acquisition in Q3, so don’t wait.

Stock #2: Our agribusiness pick is already riding surging food prices. With war causing food shortages, it earned billions more in net sales last quarter. And that looks to be only the beginning for this consistent EPS estimate beater.

Stock #3: Out of 63 shipping stocks, this small-cap looks to be the hottest play on Europe moving away from Russian natural gas. Its low valuation and soaring earnings estimates are compelling for investors.

Stock #4: This automotive supplier could soar on the trend of fixing up cars instead of buying new ones. Improving margins and record sales growth are reasons to snap up shares right now.

Don’t miss this chance to get in early on our latest Ultimate Four. We’re limiting the number of people who share that Special Report. There’s a hard deadline - the opportunity to download it ends midnight Monday, July 4th.

Look into our Ultimate Four stocks right now >>

Thanks and good trading,

Kevin

Kevin Matras serves as Executive Vice President of Zacks.com and is responsible for all of its leading products for individual investors. He invites you to download Zacks’ newly released Ultimate Four Special Report.