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3 Highly-Ranked Stocks to Buy in July for the Second Half of 2023
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Today’s episode of Full Court Finance at Zacks dives into three highly-ranked stocks from three different areas of the economy that investors might want to buy in July for long-term growth beyond the second-half of 2023.
After two boring days, many might have assumed we were headed for a calm Friday ahead of the Fourth of July weekend. Instead, the stock market appears to be headed for a bullish crescendo on the final day of the first half, with the Nasdaq up 1.5% and the S&P 500 up 1.3% through late-afternoon trading on June 30.
The bulls showed they remain firmly in command when they stepped in earlier this week as soon as the Nasdaq touched its 21-day moving average. Now the tech-heavy index and the benchmark appear ready to end the first half near fresh 52-week highs.
Image Source: Zacks Investment Research
Wall Street remains upbeat as more data highlights a sturdy U.S. economy. The Fed might have to push rates a little higher and keep them there a little longer than Wall Street hoped. But investors feel the U.S. will achieve a soft landing as the labor market, supply chains, and many other crucial areas of the economy normalize following the unprecedented covid stress and disruptions.
Plus, the earnings outlook keeps holding up. If guidance comes in solid or even slightly improved once Q2 earnings season kicks off later in July then the market could be poised to run higher.
The first half of 2023 should also serve as a useful reminder of why investors with long-term horizons are almost always best served by staying constantly exposed to stocks, as few saw the rally coming at the end of 2022.
Cadence Design Systems ((CDNS - Free Report) ) is a leader in electronic systems design, with its Intelligent System Design offerings helping deliver software, hardware, and IP that “turn design concepts into reality.” Cadence’s modeling and computational software helps in the design process of semiconductors and many other crucial and cutting-edge technologies that drive the economy.
Cadence boasts Nvidia ((NVDA - Free Report) ) as a key customer because the GPU giant loves its modeling and simulation capabilities. Cadence is one of two major players in its realm and CDNS is more vital than ever as the chip space ventures into the sub-5 nanometer world.
Image Source: Zacks Investment Research
Cadence’s top and bottom line growth outlook is impressive and its improving earnings outlook helps it land a Zacks Rank #2 (Buy) at the moment. Plus, Cadence can even be viewed as a way to gain exposure to AI, alonside Nvidia and others.
Cadence stock crushed the Zacks Tech sector over the last decade and the past 12 months, up 1,455% and 45%, respectively to trade near fresh highs. CDNS recently climbed back above its 21-day moving average, and Wall Street remains very high on the stock.
Investors have been willing to pay up for Cadence for years. Yet, on the valuation front, Cadence trades at a roughly 50% discount to its own 10-year highs, with a PEG ratio of 2.8 right now.
Lululemon ((LULU - Free Report) ) topped our Q1 FY23 earnings and sales estimates in early June as it flexes its growth engine as LULU continues to expand geographically and change the way people dress. Lululemon posted 30% revenue growth in its fiscal 2022, 42% sales expansion in FY21, and 16% average revenue growth during the five prior years.
LULU also posted 30% adjusted earnings growth in fiscal 2022 as it benefits from its higher-income customer base willing to pay $130 for leggings and $90 for shirts, no matter what the economy looks like.
Zacks estimates call for another big stretch of sales and earnings growth in FY23 and FY24. Plus, Lululemon executives project it will double its net revenue between 2021 and 2026. Lululemon’s upward earnings revisions help it land a Zacks Rank #2 (Buy) right now, and Wall Street remains very high on the stock.
Image Source: Zacks Investment Research
LULU shares have surged 500% over the last 10 years vs. the S&P 500’s 170% and 200% in the last five. The athleisure titan has cooled off during the last several years, with it trading around 20% below its peak and roughly where it was in late August 2020.
LULU’s post-earnings surge has it back above its 200-day and 50-day moving averages. In terms of valuation, Lululemon trades at a discount to its own 10-year median and 60% below its own highs.
Hubbell Incorporated ((HUBB - Free Report) ) is a leading manufacturer of utility and electrical solutions with an established track record that’s set to benefit from grid modernization, the expansion of renewable energy and EVs, the broadband buildout, and beyond. HUBB is coming off an impressive 2022 and it posted strong Q1 FY23 results and provided upbeat guidance that helps it land a Zacks Rank #1 (Strong Buy) right now.
Hubbell stock has climbed roughly 870% in the last 20 years, with a total return of 1,500% vs. the S&P 500’s 345% and 600%, respective gains. HUBB’s outperformance remains firmly intact over the last 10- and five-year time periods.
Image Source: Zacks Investment Research
Hubbell stock soared 40% in the first six months of 2023 to trade at new highs on June 30. Yet, its PEG ratio sits 20% below its decade-long highs.
Hubbell should continue to benefit from the changing energy landscape and other megatrends such as electrification for decades to come. On top of that, the company raised its dividend (by 7%) for the 15th year running in 2022, with it yielding 1.4% at the moment. HUBB also boasts a sturdy balance sheet that should help it keep boosting its dividend and buybacks.
(Disclosure: Ben Rains owns HUBB in the Zacks Alternative Energy Innovators service)
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3 Highly-Ranked Stocks to Buy in July for the Second Half of 2023
Today’s episode of Full Court Finance at Zacks dives into three highly-ranked stocks from three different areas of the economy that investors might want to buy in July for long-term growth beyond the second-half of 2023.
After two boring days, many might have assumed we were headed for a calm Friday ahead of the Fourth of July weekend. Instead, the stock market appears to be headed for a bullish crescendo on the final day of the first half, with the Nasdaq up 1.5% and the S&P 500 up 1.3% through late-afternoon trading on June 30.
The bulls showed they remain firmly in command when they stepped in earlier this week as soon as the Nasdaq touched its 21-day moving average. Now the tech-heavy index and the benchmark appear ready to end the first half near fresh 52-week highs.
Image Source: Zacks Investment Research
Wall Street remains upbeat as more data highlights a sturdy U.S. economy. The Fed might have to push rates a little higher and keep them there a little longer than Wall Street hoped. But investors feel the U.S. will achieve a soft landing as the labor market, supply chains, and many other crucial areas of the economy normalize following the unprecedented covid stress and disruptions.
Plus, the earnings outlook keeps holding up. If guidance comes in solid or even slightly improved once Q2 earnings season kicks off later in July then the market could be poised to run higher.
The first half of 2023 should also serve as a useful reminder of why investors with long-term horizons are almost always best served by staying constantly exposed to stocks, as few saw the rally coming at the end of 2022.
Cadence Design Systems ((CDNS - Free Report) ) is a leader in electronic systems design, with its Intelligent System Design offerings helping deliver software, hardware, and IP that “turn design concepts into reality.” Cadence’s modeling and computational software helps in the design process of semiconductors and many other crucial and cutting-edge technologies that drive the economy.
Cadence boasts Nvidia ((NVDA - Free Report) ) as a key customer because the GPU giant loves its modeling and simulation capabilities. Cadence is one of two major players in its realm and CDNS is more vital than ever as the chip space ventures into the sub-5 nanometer world.
Image Source: Zacks Investment Research
Cadence’s top and bottom line growth outlook is impressive and its improving earnings outlook helps it land a Zacks Rank #2 (Buy) at the moment. Plus, Cadence can even be viewed as a way to gain exposure to AI, alonside Nvidia and others.
Cadence stock crushed the Zacks Tech sector over the last decade and the past 12 months, up 1,455% and 45%, respectively to trade near fresh highs. CDNS recently climbed back above its 21-day moving average, and Wall Street remains very high on the stock.
Investors have been willing to pay up for Cadence for years. Yet, on the valuation front, Cadence trades at a roughly 50% discount to its own 10-year highs, with a PEG ratio of 2.8 right now.
Lululemon ((LULU - Free Report) ) topped our Q1 FY23 earnings and sales estimates in early June as it flexes its growth engine as LULU continues to expand geographically and change the way people dress. Lululemon posted 30% revenue growth in its fiscal 2022, 42% sales expansion in FY21, and 16% average revenue growth during the five prior years.
LULU also posted 30% adjusted earnings growth in fiscal 2022 as it benefits from its higher-income customer base willing to pay $130 for leggings and $90 for shirts, no matter what the economy looks like.
Zacks estimates call for another big stretch of sales and earnings growth in FY23 and FY24. Plus, Lululemon executives project it will double its net revenue between 2021 and 2026. Lululemon’s upward earnings revisions help it land a Zacks Rank #2 (Buy) right now, and Wall Street remains very high on the stock.
Image Source: Zacks Investment Research
LULU shares have surged 500% over the last 10 years vs. the S&P 500’s 170% and 200% in the last five. The athleisure titan has cooled off during the last several years, with it trading around 20% below its peak and roughly where it was in late August 2020.
LULU’s post-earnings surge has it back above its 200-day and 50-day moving averages. In terms of valuation, Lululemon trades at a discount to its own 10-year median and 60% below its own highs.
Hubbell Incorporated ((HUBB - Free Report) ) is a leading manufacturer of utility and electrical solutions with an established track record that’s set to benefit from grid modernization, the expansion of renewable energy and EVs, the broadband buildout, and beyond. HUBB is coming off an impressive 2022 and it posted strong Q1 FY23 results and provided upbeat guidance that helps it land a Zacks Rank #1 (Strong Buy) right now.
Hubbell stock has climbed roughly 870% in the last 20 years, with a total return of 1,500% vs. the S&P 500’s 345% and 600%, respective gains. HUBB’s outperformance remains firmly intact over the last 10- and five-year time periods.
Image Source: Zacks Investment Research
Hubbell stock soared 40% in the first six months of 2023 to trade at new highs on June 30. Yet, its PEG ratio sits 20% below its decade-long highs.
Hubbell should continue to benefit from the changing energy landscape and other megatrends such as electrification for decades to come. On top of that, the company raised its dividend (by 7%) for the 15th year running in 2022, with it yielding 1.4% at the moment. HUBB also boasts a sturdy balance sheet that should help it keep boosting its dividend and buybacks.
(Disclosure: Ben Rains owns HUBB in the Zacks Alternative Energy Innovators service)