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5 Top-Ranked Stocks That Survived October's Carnage

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Ultimately, U.S. markets closed an ugly October on a high. Strong earnings from major brand names helped all three benchmarks to gain at least 1% during Halloween’s trading session. But the indexes all suffered record reverses over the past month. Trade tensions, rising rates and concerns about slowing global growth led to these losses.

A section of market watchers think losses will continue for stocks going into November. But others think this is a healthy correction and that robust earnings and a strong economy will soon fuel gains. This is why it makes sense to bet on stocks that have increased over the past month and are poised to consolidate gains in the days ahead.

Benchmarks Suffer Record Losses

During October, the S&P 500 declined 6.9%, suffering its worst monthly loss since September 2011. The Dow declined 5.1%, suffering its sharpest monthly decline in percentage terms since January 2016. But it was the Nasdaq which suffered the most. The index lost 9.2% over the past month, its largest decline since November 2008.

In fact, tech majors experienced sustained reverses over October. In particular, the FAANG stocks were battered following concerns over earnings growth, data privacy and user security. While Amazon (AMZN - Free Report) declined 20.2%, Netflix (NFLX - Free Report) , Facebook (FB - Free Report) , Apple (AAPL - Free Report) and Alphabet (GOOGL - Free Report) plummeted 20.9%, 6.6%, 3.7% and 9.8%, respectively, in October.

Rate Spike, Trade Strife, Growth Fears Hurt Stocks

Stocks suffered a jolt early in the month after the Fed Chair said the economy still had a “a long way” to go before experiencing neutral interest rates. Powell added that the economy no longer requires a soft monetary stance that the Fed put in place nearly a decade ago. The central bank is widely expected to raise rates to 3.4% in December.

Additionally, trade fears continued to haunt markets. A report from Bloomberg released this week revealed that the United States is likely to announce fresh tariffs on Chinese imports in December. Earlier in the month, the IMF lowered its 2019 outlook for the United States and China, citing intensifying trade tensions.

Bear Market or Healthy Correction?

A section of analyst thinks that the longest bull market ever is nearing its end. The end of easy money is possibly hastening its demise. Others argue that the market is experiencing a much-needed correction after a period of overheating.

This may indeed be true since the economy remains strong and earnings continue to be robust. In this case, October’s decline could be a replay of the plunge experienced over January and February. On that occasion, markets recovered to touch new highs. 

Our Choices

Markets have endured a tough October with benchmarks suffering record losses. Concerns related to rising rates, trade tensions and slowing global growth have been the primary factors behind this decline. However, a healthy correction followed by fresh gains is likely in the month ahead.

This is why it makes sense to bet on stocks that have gained over the past month and are set to move higher in the near future. However, picking winning stocks may be difficult.

This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score. 

We have narrowed down our search to the following stocks, each of which has a Zacks Rank #1 (Strong Buy) and a good VGM Score. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mercury General Corporation (MCY - Free Report) is engaged primarily in writing all risk classifications of automobile insurance in a number of states, principally California.

Mercury General has a VGM Score of A. The company has expected earnings growth of 50.6% for the current year. The Zacks Consensus Estimate for the current year has improved by 12.3% over the last 30 days. The stock has gained 24.2% in a month.

ATN International, Inc. (ATNI - Free Report) invests, owns and operates communications companies and renewable energy assets.

ATN International has a VGM Score of B. The Zacks Consensus Estimate for the current year has improved more than 100% over the last 30 days.The stock has gained 19.8% in a month.

Core-Mark Holding Company, Inc. (CORE - Free Report) is one of the largest marketers of fresh and broad-line supply solutions to the convenience retail industry in North America.

Core-Mark Holding has a VGM Score of A. The company’s expected earnings growth for the current year is 28.3%. The Zacks Consensus Estimate for the current year has improved 2.9% over the last 30 days. The stock has gained 17.5% in a month’s time.

Heidrick & Struggles International, Inc. (HSII - Free Report) is a provider of leadership consulting, culture shaping and senior-level executive search services to organizations across the world.

Heidrick & Struggles has a VGM Score of A. The company’s projected growth rate for the current year is 84.4%. The stock has gained 16.1% over the past one month.

Amerigo Resources Ltd. (ARREF - Free Report) , through its subsidiary, is engaged in producing and selling copper and molybdenum concentrates primarily in Chile.

Amerigo Resources has a VGM Score of B. The company’s expected earnings growth for the current year is 50%. The Zacks Consensus Estimate for the current year has improved by 20% over the last 30 days. The stock has gained 10.9% over the past one month. 

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