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Tap Wall Street Rally for a Sweet November: 5 Momentum Picks
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Wall Street is set to close a fabulous October after a highly disappointing September. With just a day of trading left, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied 14.4%, 8.8% and 5%, respectively, month to date. U.S. stock markets have seen this astonishing performance despite the fact that October is historically known as an unfavorable month for investors.
We are not out of the woods as concerns like the complete devastation of the global supply-chain system, record-high inflation and a possible recession are still affecting investor sentiment. However, several positive signs have also emerged this month.
To tap the ongoing rally, we have chosen five stocks with a favorable Zacks Rank with strong momentum in October. In the past month, these stocks have provided solid returns with more upside left. The companies are —- Airbnb Inc. (ABNB - Free Report) , Bunge Ltd. (BG - Free Report) , Halliburton Co. (HAL - Free Report) , W. R. Berkley Corp. (WRB - Free Report) and CoStar Group Inc. (CSGP - Free Report) .
Momentum Likely to Continue
U.S. stock markets momentum is likely to continue in November. U.S. GDP has grown 2.6% in the third quarter, beating the consensus estimate of 2.2%. Market participants were worried that the economy might enter into a recession after it contracted in the first two quarters of this year.
In third-quarter 2022, the chain-weighted price index — a cost-of-living index adjusted for consumer behavior — rose 4.1%, well below the consensus estimate for a 5.3%. The personal consumption expenditure (PCE) price index increased 4.2%, exhibiting a sharp fall from 7.3% in the second quarter. The core (excluding the volatile food and energy items) PCE price index — Fed’s favorite inflation gauge — rose 4.5% in third quarter, in line with market’s expectation.
For September, the PCE inflation rose 0.3% month-over-month and 6.2% on a yearly basis, in line with August. The core PCE inflation rose 0.5% month-over-month and increased 5.1% year-over-year, marginally below the consensus estimate of 5.2%. All these data indicate that the peak of the current inflation may be behind us.
In September, the disposable (after adjusting for taxes and other charges) rose 0.4% month-over-month but remained flat after adjusting with the inflation rate. Inflation-adjusted personal spending rose 0.3%, below the consensus estimate of 0.4%. The personal savings rate dropped to 3.1% from 3.4% in the previous month.
Moreover, economic indicators like declining commodity prices (except food and energy), growing accumulation of inventories on the part of manufacturers and retailers, gradual slowdown of the ISM manufacturing PMI and a decline in the job openings rate are pointing to the cooling down of the U.S. economy. Finally, third-quarter 2022 earnings results and guidance issued by several U.S. technology behemoths have revealed slowing demand. Big retailers are also expected to follow suit.
Out Top Picks
We have narrowed our search to five large-cap (market capital > $10 billion) momentum stocks that have solid upside left for November. These stocks have seen positive earnings estimate revisions in the last seven days indicating that the market is expecting these companies to do good business for the rest of 2022.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Airbnb is riding on an improvement in the travel industry. Continued recovery in both longer-distance and cross-border travel owing to a reduction in travel restrictions is benefiting ABNB’s Nights & Experience bookings. Additionally, growth in Average Daily Rates and Gross Booking Value is acting as a tailwind.
Growing active listings in Latin America, North America and EMEA are contributing well to the top line. Growing sales and marketing initiatives along with continuous efforts to upgrade various aspects of the Airbnb service are helping the company gain momentum among hosts and guests.
Airbnb has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.9% over the last seven days.
Bunge operates as an agribusiness and food company worldwide. BG has an integrated global agribusiness spanning the farm-to-consumer food chain. BG operates in five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer. Bunge processes, produces, moves, distributes and markets food in five continents.
Bunge has an expected earnings growth rate of 2.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.6% over the last seven days.
Halliburton provides products and services to the energy industry worldwide. High commodity prices have increased demand for HAL’s services in North America, to which it is heavily exposed.
In particular, Halliburton’s key Completion & Production unit margins are likely to improve, with management expecting better pricing leverage going forward. Besides, Halliburton's strong free cash flow generating ability indicates its financial strength.
HAL’s healthy relationship with national oil companies and digitization efforts also bode well. The increasing cloud-based data flow between sites and back office translates into expanded margins for Halliburton.
Halliburton has an expected earnings growth rate of 91.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last seven days.
W. R. Berkley has been benefiting from its insurance business, performing well on the increase in premiums written over the past many years. W. R. Berkley has been investing in numerous startups since 2006 and has established new units in growing international markets.
W. R. Berkley’s international business is poised for growth supported by the emerging markets. WRB’s solid capital position enables capital deployment. Investment in alternative assets should help improve investment income going forward.
W. R. Berkley has an expected earnings growth rate of 26.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.1% over the last seven days.
CoStar Group provides information services to the commercial real estate industry. CSGP’s wide array of digital service offerings includes a leasing marketplace, a selling marketplace, sales comparable information, decision support, contact management, tenant information, property marketing, and industry news.
CoStar Group has three assets that provide a unique foundation for this marketplace: comprehensive national databases, a large research department and a large number of participating organizations.
CSGP has an expected earnings growth rate of 5.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 9.1% over the last seven days.
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Tap Wall Street Rally for a Sweet November: 5 Momentum Picks
Wall Street is set to close a fabulous October after a highly disappointing September. With just a day of trading left, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied 14.4%, 8.8% and 5%, respectively, month to date. U.S. stock markets have seen this astonishing performance despite the fact that October is historically known as an unfavorable month for investors.
We are not out of the woods as concerns like the complete devastation of the global supply-chain system, record-high inflation and a possible recession are still affecting investor sentiment. However, several positive signs have also emerged this month.
To tap the ongoing rally, we have chosen five stocks with a favorable Zacks Rank with strong momentum in October. In the past month, these stocks have provided solid returns with more upside left. The companies are —- Airbnb Inc. (ABNB - Free Report) , Bunge Ltd. (BG - Free Report) , Halliburton Co. (HAL - Free Report) , W. R. Berkley Corp. (WRB - Free Report) and CoStar Group Inc. (CSGP - Free Report) .
Momentum Likely to Continue
U.S. stock markets momentum is likely to continue in November. U.S. GDP has grown 2.6% in the third quarter, beating the consensus estimate of 2.2%. Market participants were worried that the economy might enter into a recession after it contracted in the first two quarters of this year.
In third-quarter 2022, the chain-weighted price index — a cost-of-living index adjusted for consumer behavior — rose 4.1%, well below the consensus estimate for a 5.3%. The personal consumption expenditure (PCE) price index increased 4.2%, exhibiting a sharp fall from 7.3% in the second quarter. The core (excluding the volatile food and energy items) PCE price index — Fed’s favorite inflation gauge — rose 4.5% in third quarter, in line with market’s expectation.
For September, the PCE inflation rose 0.3% month-over-month and 6.2% on a yearly basis, in line with August. The core PCE inflation rose 0.5% month-over-month and increased 5.1% year-over-year, marginally below the consensus estimate of 5.2%. All these data indicate that the peak of the current inflation may be behind us.
In September, the disposable (after adjusting for taxes and other charges) rose 0.4% month-over-month but remained flat after adjusting with the inflation rate. Inflation-adjusted personal spending rose 0.3%, below the consensus estimate of 0.4%. The personal savings rate dropped to 3.1% from 3.4% in the previous month.
Moreover, economic indicators like declining commodity prices (except food and energy), growing accumulation of inventories on the part of manufacturers and retailers, gradual slowdown of the ISM manufacturing PMI and a decline in the job openings rate are pointing to the cooling down of the U.S. economy.
Finally, third-quarter 2022 earnings results and guidance issued by several U.S. technology behemoths have revealed slowing demand. Big retailers are also expected to follow suit.
Out Top Picks
We have narrowed our search to five large-cap (market capital > $10 billion) momentum stocks that have solid upside left for November. These stocks have seen positive earnings estimate revisions in the last seven days indicating that the market is expecting these companies to do good business for the rest of 2022.
In October, each of these stocks have outperformed the market’s benchmark — the S&P 500 Index. Moreover, each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Momentum Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
Airbnb is riding on an improvement in the travel industry. Continued recovery in both longer-distance and cross-border travel owing to a reduction in travel restrictions is benefiting ABNB’s Nights & Experience bookings. Additionally, growth in Average Daily Rates and Gross Booking Value is acting as a tailwind.
Growing active listings in Latin America, North America and EMEA are contributing well to the top line. Growing sales and marketing initiatives along with continuous efforts to upgrade various aspects of the Airbnb service are helping the company gain momentum among hosts and guests.
Airbnb has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings improved 0.9% over the last seven days.
Bunge operates as an agribusiness and food company worldwide. BG has an integrated global agribusiness spanning the farm-to-consumer food chain. BG operates in five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer. Bunge processes, produces, moves, distributes and markets food in five continents.
Bunge has an expected earnings growth rate of 2.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.6% over the last seven days.
Halliburton provides products and services to the energy industry worldwide. High commodity prices have increased demand for HAL’s services in North America, to which it is heavily exposed.
In particular, Halliburton’s key Completion & Production unit margins are likely to improve, with management expecting better pricing leverage going forward. Besides, Halliburton's strong free cash flow generating ability indicates its financial strength.
HAL’s healthy relationship with national oil companies and digitization efforts also bode well. The increasing cloud-based data flow between sites and back office translates into expanded margins for Halliburton.
Halliburton has an expected earnings growth rate of 91.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last seven days.
W. R. Berkley has been benefiting from its insurance business, performing well on the increase in premiums written over the past many years. W. R. Berkley has been investing in numerous startups since 2006 and has established new units in growing international markets.
W. R. Berkley’s international business is poised for growth supported by the emerging markets. WRB’s solid capital position enables capital deployment. Investment in alternative assets should help improve investment income going forward.
W. R. Berkley has an expected earnings growth rate of 26.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.1% over the last seven days.
CoStar Group provides information services to the commercial real estate industry. CSGP’s wide array of digital service offerings includes a leasing marketplace, a selling marketplace, sales comparable information, decision support, contact management, tenant information, property marketing, and industry news.
CoStar Group has three assets that provide a unique foundation for this marketplace: comprehensive national databases, a large research department and a large number of participating organizations.
CSGP has an expected earnings growth rate of 5.3% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 9.1% over the last seven days.