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Buy 5 Underperformers of 1H That Are Set to Be on a Roll in 2H
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Wall Street had an impressive first half 2023 after a disappointing 2022. Major stock indexes achieved several milestones during this period. The S&P 500 and the Nasdaq Composite exited the bear market and formed a new bull market in first-half 2023. The S&P 500 recorded its best half in four years while the Nasdaq Composite posted its best first-half in 40 years.
Consequently, most of the stocks surged during this period. This was a reversal from 2022, when most of the U.S. stocks plummeted as the pandemic-era fiscal incentives were withdrawn and the Fed pursued tight monetary control with rigorous increases in the benchmark interest rate.
As a result, Wall Street started 2023 with an overall undervaluation of equity markets. The steady decline in the inflation rate from its peak on June 2022 and the Fed’s reduction of the magnitude of interest rate hike also favored U.S. stock markets.
However, several stocks did not participate in dream rally of first-half 2023. Many of these stocks are set to roll in the second half. At this stage, it should be prudent to invest in such stocks with a favorable Zacks Rank.
Our Top Picks
We have narrowed our search to five U.S. corporate bigwigs (market capital >$40 billion) with negative returns in stock prices in the first half of 2023. These stocks have strong potential for the rest of 2023. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Honeywell International Inc. (HON - Free Report) is benefiting from recovery in commercial flight hours and strength in advanced materials and UOP businesses. Solid operational execution, pricing actions and cost-control measures continue to drive HON’s top line. The company’s bullish forecast for 2023 holds promise. HON’s deal to acquire Compressor Controls will be beneficial going forward.
Honeywell International has an expected revenue and earnings growth rate of 3.2% and 3.6%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has improved 0.1% over the last 30 days.
Humana Inc.’s (HUM - Free Report) Medicaid business benefits from several contract wins and renewals, thereby contributing to its top line. Strategic buyouts and alliances place HUM well for growth in the future. HUM’s revenues for 2023 are expected within $104.4-$106.4 billion.
Solid contributions from the Insurance and CenterWell segments bode well for HUM. We expect Medicaid revenues to be $7.6 billion in 2023. Management estimates 2023 EPS to be at least $28.25, reflecting at least 11.9% growth year over year.
Humana has an expected revenue and earnings growth rate of 11.3% and 11.8%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has improved 0.4% over the last seven days.
Keurig Dr Pepper Inc. (KDP - Free Report) posted first-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Both metrics improved year over year. Results have gained from continued brand strength and significant pricing.
KDP has been witnessing continued momentum in the Refreshment Beverages segment for a long time. KDP witnessed market share expansion above 88% of its cold beverage portfolio. This mainly reflected strength in CSDs, seltzers, energy, apple juice, coconut waters and fruit drinks.
Keurig Dr Pepper has an expected revenue and earnings growth rate of 4.6% and 10.9%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has improved 2% over the last seven days.
NextEra Energy Inc. (NEE - Free Report) continues to expand its operations through organic projects and strategic acquisitions. NEE has many renewable projects in its backlog and their completion will reduce emissions. The merger of Gulf Power and FPL strengthens NEE’s position in Florida.
FPL’s customer base is expanding as Florida’s economy improves and continues to boost demand for its services. NextEra has ample liquidity to meet its near-term debt obligations and efficient debt management acts as a tailwind. NEE is expanding its operations in the water space through acquisition.
NextEra Energy has an expected revenue and earnings growth rate of 10.4% and 5.9%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has improved 5% over the last 60 days.
The Coca-Cola Co. (KO - Free Report) has benefited from the continued momentum in its business. Sales have gained from revenue growth across its operating segments, aided by an improved price/mix and a rise in concentrate sales. KO is poised to gain from innovations and accelerating digital investments. KO provided an upbeat guidance for 2023.
The Coca-Cola has an expected revenue and earnings growth rate of 4.7% and 1.5%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has remained the same over the last 60 days.
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Buy 5 Underperformers of 1H That Are Set to Be on a Roll in 2H
Wall Street had an impressive first half 2023 after a disappointing 2022. Major stock indexes achieved several milestones during this period. The S&P 500 and the Nasdaq Composite exited the bear market and formed a new bull market in first-half 2023. The S&P 500 recorded its best half in four years while the Nasdaq Composite posted its best first-half in 40 years.
Consequently, most of the stocks surged during this period. This was a reversal from 2022, when most of the U.S. stocks plummeted as the pandemic-era fiscal incentives were withdrawn and the Fed pursued tight monetary control with rigorous increases in the benchmark interest rate.
As a result, Wall Street started 2023 with an overall undervaluation of equity markets. The steady decline in the inflation rate from its peak on June 2022 and the Fed’s reduction of the magnitude of interest rate hike also favored U.S. stock markets.
However, several stocks did not participate in dream rally of first-half 2023. Many of these stocks are set to roll in the second half. At this stage, it should be prudent to invest in such stocks with a favorable Zacks Rank.
Our Top Picks
We have narrowed our search to five U.S. corporate bigwigs (market capital >$40 billion) with negative returns in stock prices in the first half of 2023. These stocks have strong potential for the rest of 2023. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Honeywell International Inc. (HON - Free Report) is benefiting from recovery in commercial flight hours and strength in advanced materials and UOP businesses. Solid operational execution, pricing actions and cost-control measures continue to drive HON’s top line. The company’s bullish forecast for 2023 holds promise. HON’s deal to acquire Compressor Controls will be beneficial going forward.
Honeywell International has an expected revenue and earnings growth rate of 3.2% and 3.6%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has improved 0.1% over the last 30 days.
Humana Inc.’s (HUM - Free Report) Medicaid business benefits from several contract wins and renewals, thereby contributing to its top line. Strategic buyouts and alliances place HUM well for growth in the future. HUM’s revenues for 2023 are expected within $104.4-$106.4 billion.
Solid contributions from the Insurance and CenterWell segments bode well for HUM. We expect Medicaid revenues to be $7.6 billion in 2023. Management estimates 2023 EPS to be at least $28.25, reflecting at least 11.9% growth year over year.
Humana has an expected revenue and earnings growth rate of 11.3% and 11.8%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has improved 0.4% over the last seven days.
Keurig Dr Pepper Inc. (KDP - Free Report) posted first-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Both metrics improved year over year. Results have gained from continued brand strength and significant pricing.
KDP has been witnessing continued momentum in the Refreshment Beverages segment for a long time. KDP witnessed market share expansion above 88% of its cold beverage portfolio. This mainly reflected strength in CSDs, seltzers, energy, apple juice, coconut waters and fruit drinks.
Keurig Dr Pepper has an expected revenue and earnings growth rate of 4.6% and 10.9%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has improved 2% over the last seven days.
NextEra Energy Inc. (NEE - Free Report) continues to expand its operations through organic projects and strategic acquisitions. NEE has many renewable projects in its backlog and their completion will reduce emissions. The merger of Gulf Power and FPL strengthens NEE’s position in Florida.
FPL’s customer base is expanding as Florida’s economy improves and continues to boost demand for its services. NextEra has ample liquidity to meet its near-term debt obligations and efficient debt management acts as a tailwind. NEE is expanding its operations in the water space through acquisition.
NextEra Energy has an expected revenue and earnings growth rate of 10.4% and 5.9%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has improved 5% over the last 60 days.
The Coca-Cola Co. (KO - Free Report) has benefited from the continued momentum in its business. Sales have gained from revenue growth across its operating segments, aided by an improved price/mix and a rise in concentrate sales. KO is poised to gain from innovations and accelerating digital investments. KO provided an upbeat guidance for 2023.
The Coca-Cola has an expected revenue and earnings growth rate of 4.7% and 1.5%, respectively, for the current quarter (ending September 2023). The Zacks Consensus Estimate for current-quarter earnings has remained the same over the last 60 days.