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5 High-Flying Must-Buy Mid Caps for 2023 From a Volatile 2022
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We are about to close a highly disappointing 2022 with less than two weeks of trading days left. A record-high inflation rate and the Fed’s ultra-hawkish monetary tightening with a rigorous hike in interest rate and concerns about a near-term recession resulted in severe volatility throughout the year.
Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have tumbled 6.1%, 15.7% and 28.1%, respectively. Likewise, the mid-cap centric benchmark — the S&P 400 Index — has tanked 11.7% year to date. Despite these negatives, it will be prudent to invest in mid-cap stocks with a favorable Zacks Rank that have skyrocketed in 2022 and have solid upside left for 2023.
Here are five such mid-cap (market capital > $1 billion and < $10 billion) stocks — e.l.f. Beauty Inc. (ELF - Free Report) , Helmerich & Payne Inc. (HP - Free Report) , Frontline Ltd. (FRO - Free Report) , CONSOL Energy Inc. (CEIX - Free Report) and Super Micro Computer Inc. (SMCI - Free Report) .
Why Mid-Cap Stocks
Investment in mid-cap stocks is often recognized as a good portfolio diversification strategy. These stocks combine the attractive attributes of both small and large-cap stocks. Top-ranked mid-cap stocks have a high potential of enhancing their profitability, productivity and market share. These may also become large caps in due course of time.
If the economic recovery slows down due to any unforeseen internal or external disturbance, mid-cap stocks will be less susceptible to losses than their large-cap counterparts owing to less international exposure.
On the other hand, if the crisis doesn’t worsen, these stocks will gain more than small caps due to established management teams, a broad distribution network, brand recognition and ready access to the capital markets.
A Few Positives
The Department of Labor reported that the consumer price index (CPI) for the month of November rose 0.1% month-over-month compared with the consensus estimate of a rise of 0.3%. Year over year, the CPI increased 7.1% year over year against the consensus estimate of a 7.3% rise.
The core CPI (excluding volatile food and energy items) rose 0.2% month over month and 6% on an annual basis, compared with respective consensus estimates of 0.3% and 6.1%. The core CPI inflation came below the consensus estimate for the last two months.
The decline in CPI and core CPI may be marginal but peak inflation seems behind us. In fact, economic indicators like a tepid housing sector, declining commodity prices (except food and energy), growing accumulation of inventories on the part of manufacturers and retailers, a gradual slowdown of the ISM manufacturing PMI and a decline in the job openings rate were pointing to the cooling down of the U.S. economy.
A less-than-expected inflation rate in October and November with respect to several measures along with a dovish comment from Fed Chairman Jerome Powell in November boosted investors’ confidence and a possible reduction of the magnitude of the interest rate hike starting from the December FOMC meeting should boost market participants’ confidence in risky assets like equities.
Out Top Picks
We have narrowed our search to five mid-cap stocks that have popped in 2022 with solid upside left for 2023. These stocks have seen strong earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy). 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 year to date.
Image Source: Zacks Investment Research
e.l.f. Beauty operates as a cosmetic company. ELF’s cosmetic category primarily consists of face makeup, eye makeup, lip products, nail products and cosmetics sets/kits, excludes beauty tools and accessories, such as brushes and applicators.
e.l.f. Beauty has an expected earnings growth rate of 33.3% for the current year (ending March 2023). The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the last 60 days. The stock price of ELF has appreciated 68.1% year to date.
Helmerich & Payne is engaged in the contract drilling of oil and gas wells in the United States and internationally. HP’s technologically-advanced FlexRigs are much in demand and the company has already upgraded most of its drilling feet with the latest technology.
Customer acceptance of Helmerich & Payne's digitization efforts has led to cost reduction, improvement in efficiency and higher profits. HP’s low debt levels, both on an absolute and relative basis, are also impressive.
Helmerich & Payne has an expected earnings growth rate of more than 100% for the current year (ending September 2023). The Zacks Consensus Estimate for current-year earnings has improved 19.9% over the last 30 days. The stock price of HP has climbed 104.2% year to date.
CONSOL Energy produces and exports bituminous coal in the United States. CEIX operates through the PAMC, CONSOL Marine Terminal, and Other segments. CONSOL Energy engages in the mining, preparation, and marketing of bituminous coal to power generators, industrial end-users, and metallurgical end-users, provision of coal export terminal services, and development of the Itmann Mine and the Greenfield reserves.
CONSOL Energy has an expected earnings growth rate of more than 100% for next year. The Zacks Consensus Estimate for next-year earnings has improved 12.6% over the last 60 days. The stock price of CEIX has soared 214.8% year to date.
Super Micro Computer designs, develops, manufactures and sells energy-efficient, application-optimized server solutions based on the x86 architecture. SMCI’s solutions include a range of rack mount and blade server systems, as well as components. Super Micro Computer emphasizes superior product design and uncompromising quality control to produce industry-leading server-boards, chassis and server systems.
Super Micro Computer has an expected earnings growth rate of 69.6% for the current year (ending June 2023). The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the last 60 days. The stock price of SMCI has jumped 104.8% year to date.
Frontline is a shipping company engaged in the seaborne transportation of crude oil and oil products worldwide. FRO owns and operates oil and product tankers. As of Dec31, 2021, Frontline operated a fleet of 70 vessels. FRO is also involved in the charter, purchase, and sale of vessels.
Frontline has an expected earnings growth rate of 78.5% for next year. The Zacks Consensus Estimate earnings next year has improved 13.2% over the last 30 days. The stock price of FRO has surged 97.8% year to date.
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5 High-Flying Must-Buy Mid Caps for 2023 From a Volatile 2022
We are about to close a highly disappointing 2022 with less than two weeks of trading days left. A record-high inflation rate and the Fed’s ultra-hawkish monetary tightening with a rigorous hike in interest rate and concerns about a near-term recession resulted in severe volatility throughout the year.
Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have tumbled 6.1%, 15.7% and 28.1%, respectively. Likewise, the mid-cap centric benchmark — the S&P 400 Index — has tanked 11.7% year to date. Despite these negatives, it will be prudent to invest in mid-cap stocks with a favorable Zacks Rank that have skyrocketed in 2022 and have solid upside left for 2023.
Here are five such mid-cap (market capital > $1 billion and < $10 billion) stocks — e.l.f. Beauty Inc. (ELF - Free Report) , Helmerich & Payne Inc. (HP - Free Report) , Frontline Ltd. (FRO - Free Report) , CONSOL Energy Inc. (CEIX - Free Report) and Super Micro Computer Inc. (SMCI - Free Report) .
Why Mid-Cap Stocks
Investment in mid-cap stocks is often recognized as a good portfolio diversification strategy. These stocks combine the attractive attributes of both small and large-cap stocks. Top-ranked mid-cap stocks have a high potential of enhancing their profitability, productivity and market share. These may also become large caps in due course of time.
If the economic recovery slows down due to any unforeseen internal or external disturbance, mid-cap stocks will be less susceptible to losses than their large-cap counterparts owing to less international exposure.
On the other hand, if the crisis doesn’t worsen, these stocks will gain more than small caps due to established management teams, a broad distribution network, brand recognition and ready access to the capital markets.
A Few Positives
The Department of Labor reported that the consumer price index (CPI) for the month of November rose 0.1% month-over-month compared with the consensus estimate of a rise of 0.3%. Year over year, the CPI increased 7.1% year over year against the consensus estimate of a 7.3% rise.
The core CPI (excluding volatile food and energy items) rose 0.2% month over month and 6% on an annual basis, compared with respective consensus estimates of 0.3% and 6.1%. The core CPI inflation came below the consensus estimate for the last two months.
The decline in CPI and core CPI may be marginal but peak inflation seems behind us. In fact, economic indicators like a tepid housing sector, declining commodity prices (except food and energy), growing accumulation of inventories on the part of manufacturers and retailers, a gradual slowdown of the ISM manufacturing PMI and a decline in the job openings rate were pointing to the cooling down of the U.S. economy.
A less-than-expected inflation rate in October and November with respect to several measures along with a dovish comment from Fed Chairman Jerome Powell in November boosted investors’ confidence and a possible reduction of the magnitude of the interest rate hike starting from the December FOMC meeting should boost market participants’ confidence in risky assets like equities.
Out Top Picks
We have narrowed our search to five mid-cap stocks that have popped in 2022 with solid upside left for 2023. These stocks have seen strong earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy). 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 year to date.
Image Source: Zacks Investment Research
e.l.f. Beauty operates as a cosmetic company. ELF’s cosmetic category primarily consists of face makeup, eye makeup, lip products, nail products and cosmetics sets/kits, excludes beauty tools and accessories, such as brushes and applicators.
e.l.f. Beauty has an expected earnings growth rate of 33.3% for the current year (ending March 2023). The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the last 60 days. The stock price of ELF has appreciated 68.1% year to date.
Helmerich & Payne is engaged in the contract drilling of oil and gas wells in the United States and internationally. HP’s technologically-advanced FlexRigs are much in demand and the company has already upgraded most of its drilling feet with the latest technology.
Customer acceptance of Helmerich & Payne's digitization efforts has led to cost reduction, improvement in efficiency and higher profits. HP’s low debt levels, both on an absolute and relative basis, are also impressive.
Helmerich & Payne has an expected earnings growth rate of more than 100% for the current year (ending September 2023). The Zacks Consensus Estimate for current-year earnings has improved 19.9% over the last 30 days. The stock price of HP has climbed 104.2% year to date.
CONSOL Energy produces and exports bituminous coal in the United States. CEIX operates through the PAMC, CONSOL Marine Terminal, and Other segments. CONSOL Energy engages in the mining, preparation, and marketing of bituminous coal to power generators, industrial end-users, and metallurgical end-users, provision of coal export terminal services, and development of the Itmann Mine and the Greenfield reserves.
CONSOL Energy has an expected earnings growth rate of more than 100% for next year. The Zacks Consensus Estimate for next-year earnings has improved 12.6% over the last 60 days. The stock price of CEIX has soared 214.8% year to date.
Super Micro Computer designs, develops, manufactures and sells energy-efficient, application-optimized server solutions based on the x86 architecture. SMCI’s solutions include a range of rack mount and blade server systems, as well as components. Super Micro Computer emphasizes superior product design and uncompromising quality control to produce industry-leading server-boards, chassis and server systems.
Super Micro Computer has an expected earnings growth rate of 69.6% for the current year (ending June 2023). The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the last 60 days. The stock price of SMCI has jumped 104.8% year to date.
Frontline is a shipping company engaged in the seaborne transportation of crude oil and oil products worldwide. FRO owns and operates oil and product tankers. As of Dec31, 2021, Frontline operated a fleet of 70 vessels. FRO is also involved in the charter, purchase, and sale of vessels.
Frontline has an expected earnings growth rate of 78.5% for next year. The Zacks Consensus Estimate earnings next year has improved 13.2% over the last 30 days. The stock price of FRO has surged 97.8% year to date.