The last three months were quite eventful for Wall Street. Overall, the stock market continued its bull run buoyed by strong economic data that confirmed the U.S. economy's solid footing. However, volatility reared its ugly face again.
In the last week of March, the stock market was in turmoil due to the yield curve inversion between the 10-year and 3-month U.S. Treasury Notes. Finally, volatility returned in May once trade negotiations between the United States and China halted, just when the parties were about to strike a deal.
Wall Street Tumbles as Trade War Resurfaces
On May 10, the U.S. government hiked existing tariff rates to 25% from 10% on $200 billion of Chinese exports. In 2018, the Trump administration imposed 25% tariff on $50 billion of Chinese goods. Moreover, President Trump threatened to levy 25% tariff on another $325 billion of Chinese goods. Total amount will surpas China's yearly export to the United States.
Consequently, the three major stock indexes -- the Dow, S&P 500 and Nasdaq Composite -- plunged 2.1%, 2.2% and 3%, respectively, in the week ended May 10.
Concerns Regarding Global Economic Slowdown
On Apr 9, the International Monetary Fund (IMF) reduced global economic growth forecasts for 2019. This was the third reduction in the last six months. The new growth projection is 3.3% compared with 3.5% in January and 3.7% in October. The IMF cited trade-related conflict between the United States and China as the primary reason for lowering global growth projections.
Investment management firm Morgan Stanly estimated a 0.3% drop in Chinese GDP and 8-12% erosion of emerging markets valuation if the United States hiked tariffs. Barclays predicted that the new tariffs will hurt 3-5% of Chinese exports and 0.5% of its GDP.
The United States will also bear the brunt of tariffs. China is the largest trading partner of the United States. A weak economy in China, the largest market for high-tech products, will generate headwinds for U.S. technology companies.
Moreover, China plays the role of a low-cost supplier of intermediary products and other inputs to high-tech U.S. industries. Tariffs will raise the cost of these products making it very difficult for businesses to formulate long-term plans.
5 Stocks Moving Higher
The recent concerns about global economic slowdown and temporary yield curve inversion have not stalled the market’s growth. We have been able to narrow down our search to five stocks, which have moved higher in the last three months and still have upside left. All five stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CMCSA Corp. (CMCSA - Free Report) operates as a media and technology company worldwide. It operates through Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, Theme Parks, and Sky segments.
In an attempt to stay competitive, Comcast has ventured into the U.S. wireless industry with the nationwide rollout of its wireless services under the Xfinity Mobile brand. Moreover, Sky’s acquisition helps Comcast to expand in Europe, where pay-TV penetration is rapidly increasing.
The company has an expected earnings growth rate of 14.5% for the current year. The Zacks Consensus Estimate for the current year has improved 2.8% over the last 30 days. The stock has surged 15.8% in the last three months.
Cadence Design Systems Inc. (CDNS - Free Report) offers functional verification services, including JasperGold, a formal verification platform; Xcelium, a parallel simulation platform; Palladium Z1, an enterprise emulation platform; and Protium S1 field-programmable gate array prototyping platform.
Autonomous vehicle is a notable growth market for Cadence. It has also introduced a broad portfolio of interface and memory design IP solutions for automotive applications. Moreover, the company is focusing on developing its footprint in the aerospace and defense segment.
The company has an expected earnings growth rate of 12.3% for the current year. The Zacks Consensus Estimate for the current year has improved 2.4% over the last 30 days. The stock has surged 34.3% in the last three months.
Carlisle Companies Inc. (CSL - Free Report) is a diversified, global operator of niche brands and businesses with highly engineered and high margin products. Carlisle's global footprint, diversified product portfolio and the ability to penetrate in different markets are commendable.
Carlisle is one of the leading manufacturers of a complete range of roofing and waterproofing products for commercial and industrial buildings. With the acquisitions in Germany and the Netherlands, the company has become one of the major European manufacturer and supplier of EPDM (rubber) roofing systems.
The company has an expected earnings growth rate of 25.4% for the current year. The Zacks Consensus Estimate for the current year has improved 5.7% over the last 30 days. The stock has surged 12.8% in the last three months.
Hess Corp. (HES - Free Report) explores, develops, produces, purchases, transports, and sells crude oil, natural gas liquids, and natural gas. It operates through two segments, Exploration and Production, and Midstream.
The company made world-class oil discoveries at theStabroek Block, located off the coast of Guyana. Hess estimates gross resources of more than 5 billion barrels of oil equivalent from its 13 promising discoveries in the Stabroek Block.
The company has an expected earnings growth rate of 116.2% for the current year. The Zacks Consensus Estimate for the current year has improved 114.6% over the last 30 days. The stock has surged 11.4% in the last three months.
Devon Energy Corp. (DVN - Free Report) is a leading independent energy company engaged in finding and producing oil and natural gas. It operates approximately 12,900 gross wells. Devon Energy continues to divest its non-core assets and focus on the resource-rich Delaware and STACK assets, which are the backbone of its U.S. based production.
The company’s diversified portfolio and focus on high-margin assets hold significant long-term growth potential. For the rest of 2019, the company plans to invest in the range of $1.3-$1.5 billion in exploration and production activities.
The company has an expected earnings growth rate of 68.2% for the current year. The Zacks Consensus Estimate for the current year has improved 20.6% over the last 30 days. The stock has surged 14.5% in the last three months.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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