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Value and Growth Investors Agree: 5 Best Stocks for 2017
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The U.S. stock market rally has been continuing with the Dow Jones Industrial Average close to the 20,000 mark. The index has risen over 2,000 points from the beginning of this year and has repeatedly scaled new highs since the presidential election. President-elect Donald Trump’s pro-growth policies, including prospective tax rate cuts, infrastructure spending and regulatory rollbacks have boosted investor sentiment. Moreover, the better-than-expected third-quarter earnings performance has supported the rally. In the view of this bullishness, value stocks with high growth make smart bets for investors.
Rate Hike Possibilities Rife
The Fed rate hike is almost a given on the conclusion of the meeting today. Investors and economists are almost sure of an interest rate hike by 25 basis points for the second time in a decade, after Dec 2015. This has been supported by strong economic data and low unemployment level. An announcement of the hike is not expected to impact the market much but details regarding the probable hike or hikes in 2017 are awaited. Frequent hikes in the next few months would affect heavy-debt industries like utilities and REITs as it implies an increase in their cost of debt.
Oil Gains Ground
The pact signed by OPEC members to cut oil production and the decision of non-OPEC countries, led by Russia, to also cut down production have driven the rise in oil price. If the OPEC and non-OPEC members stick to the decision, there will likely be an undersupply of oil in the first half of 2017. However, supply of crude by OPEC members had scaled a record high in Nov 2016, when the oil production cut was being discussed.
The countries will have to cut production by a higher number of barrels to reach their target ceiling. Moreover, the deal will be reviewed in the OPEC meeting in May, implying that the cut may be for the short term only. Meanwhile, U.S. companies have increased production and U.S. shale gas production is expected to increase further in Jan 2017, per Energy Information Administration (EIA). With the high level of uncertainty in the sector, companies with strong fundamentals make valuable picks.
Stock Picks
Overall, the economy seems to be enjoying a bull run which spells good times for investors. However, it is important to find the right stocks to cash in on the bountiful opportunities. We have chosen value stocks with high growth potential to minimize risks and increase potential returns. A value stock implies stocks trading lower than their fair value or intrinsic value and thus offer a significant upside potential. For this particular strategy, the stocks with a Value Score of ‘A’ and a Growth Score of ‘A’ have been selected.
Moreover, we have zeroed in on stocks with a low price/earnings (“P/E”) ratio as these can prove to be great bargains. A low P/E indicates a decline in a stock’s price or an improvement in its earnings performance. Additionally, the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Based on the above criteria, we have screened five stocks that are expected to continue to scale higher.
Braskem S.A. (BAK - Free Report) , headquartered in Sao Paulo, is the largest petrochemical operation in Latin America. With a P/E of 7.67, the stock appears to be a fundamentally strong pick for investors looking for exposure in the oil and gas sector. The company saw its share price rise 44.4% year to date.
Seagate Technology plc (STX - Free Report) , headquartered in Dublin, Ireland, offers a portfolio of hard disc drives, solid state drives and solid state hybrid drives. The company has a P/E of 14.4 and its share prices have risen 6.9% year to date.
FutureFuel Corp. (FF - Free Report) , headquartered in Clayton, MO, manufactures diversified chemical products and biobased products comprising biofuels and biobased specialty chemical products. The company has a P/E of 10.24. Its stock has gained 16.8% so far this year.
Walker & Dunlop, Inc. (WD - Free Report) , headquartered in Bethesda, MD, is engaged in providing commercial real estate financial services in the U.S. The company, rallying 10.7% year to date, has a P/E of 10.04.
Hawaiian Holdings, Inc. (HA - Free Report) , headquartered in Honululu, HI, is a holding company of Hawaiian Airlines. The company has a P/E of 11.58 and its shares have gained 56.7% year to date.
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Value and Growth Investors Agree: 5 Best Stocks for 2017
The U.S. stock market rally has been continuing with the Dow Jones Industrial Average close to the 20,000 mark. The index has risen over 2,000 points from the beginning of this year and has repeatedly scaled new highs since the presidential election. President-elect Donald Trump’s pro-growth policies, including prospective tax rate cuts, infrastructure spending and regulatory rollbacks have boosted investor sentiment. Moreover, the better-than-expected third-quarter earnings performance has supported the rally. In the view of this bullishness, value stocks with high growth make smart bets for investors.
Rate Hike Possibilities Rife
The Fed rate hike is almost a given on the conclusion of the meeting today. Investors and economists are almost sure of an interest rate hike by 25 basis points for the second time in a decade, after Dec 2015. This has been supported by strong economic data and low unemployment level. An announcement of the hike is not expected to impact the market much but details regarding the probable hike or hikes in 2017 are awaited. Frequent hikes in the next few months would affect heavy-debt industries like utilities and REITs as it implies an increase in their cost of debt.
Oil Gains Ground
The pact signed by OPEC members to cut oil production and the decision of non-OPEC countries, led by Russia, to also cut down production have driven the rise in oil price. If the OPEC and non-OPEC members stick to the decision, there will likely be an undersupply of oil in the first half of 2017. However, supply of crude by OPEC members had scaled a record high in Nov 2016, when the oil production cut was being discussed.
The countries will have to cut production by a higher number of barrels to reach their target ceiling. Moreover, the deal will be reviewed in the OPEC meeting in May, implying that the cut may be for the short term only. Meanwhile, U.S. companies have increased production and U.S. shale gas production is expected to increase further in Jan 2017, per Energy Information Administration (EIA). With the high level of uncertainty in the sector, companies with strong fundamentals make valuable picks.
Stock Picks
Overall, the economy seems to be enjoying a bull run which spells good times for investors. However, it is important to find the right stocks to cash in on the bountiful opportunities. We have chosen value stocks with high growth potential to minimize risks and increase potential returns. A value stock implies stocks trading lower than their fair value or intrinsic value and thus offer a significant upside potential. For this particular strategy, the stocks with a Value Score of ‘A’ and a Growth Score of ‘A’ have been selected.
Moreover, we have zeroed in on stocks with a low price/earnings (“P/E”) ratio as these can prove to be great bargains. A low P/E indicates a decline in a stock’s price or an improvement in its earnings performance. Additionally, the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Based on the above criteria, we have screened five stocks that are expected to continue to scale higher.
Braskem S.A. (BAK - Free Report) , headquartered in Sao Paulo, is the largest petrochemical operation in Latin America. With a P/E of 7.67, the stock appears to be a fundamentally strong pick for investors looking for exposure in the oil and gas sector. The company saw its share price rise 44.4% year to date.
Seagate Technology plc (STX - Free Report) , headquartered in Dublin, Ireland, offers a portfolio of hard disc drives, solid state drives and solid state hybrid drives. The company has a P/E of 14.4 and its share prices have risen 6.9% year to date.
FutureFuel Corp. (FF - Free Report) , headquartered in Clayton, MO, manufactures diversified chemical products and biobased products comprising biofuels and biobased specialty chemical products. The company has a P/E of 10.24. Its stock has gained 16.8% so far this year.
Walker & Dunlop, Inc. (WD - Free Report) , headquartered in Bethesda, MD, is engaged in providing commercial real estate financial services in the U.S. The company, rallying 10.7% year to date, has a P/E of 10.04.
Hawaiian Holdings, Inc. (HA - Free Report) , headquartered in Honululu, HI, is a holding company of Hawaiian Airlines. The company has a P/E of 11.58 and its shares have gained 56.7% year to date.
Zacks' Best Investment Ideas for Long-Term Profit
Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>