15 Hit Stocks to Buy Now Before the Market Rise: Evercore
- After dropping nearly 20% in the past few months, shares have risen over the past week.
- Julian Emmanuel, a strategist at Evercore, says there are some signs that the rally will continue.
- He says that if a bear market is avoided, hard-hit but highly profitable stocks will outperform.
Nobody wants to be too early to say the stock market slump is over, but with stocks up more than 6% from last week’s lows, some signs of hope are emerging.
Julian Emmanuel, who leads Evercore’s equities, derivatives and quantitative strategy team, says there are some indications that the worst is over, including a lower yield on 10-year US Treasuries and the fact that the dollar has slipped from recent highs.
Other factors such as strong corporate earnings, loosening of the correlation between stocks and bonds that have emerged this year, and improvement in the Chinese economy could also contribute to creating a more positive environment for stocks. But he acknowledges that not all evidence points to an imminent recovery.
“Pockets of capitulation have emerged in some areas, including a rise in the Nasdaq 100
(VXN). . “
But either way, Emmanuel says that after a sharp sell-off — a sale he either just missed out on
Based on the closing prices of the index, or those that just barely got there based on today’s levels – a lot of opportunities have emerged.
“With signs that the stock market slump may be about to end or soon, we remain focused on specific stock ideas in a non-correlated environment that continue to reward alpha on beta,” he said.
While the bear market and
It may force investors to take a very different approach, says Emmanuel, if they look at some other market that isn’t quite bearish, and it will show them a profitable path forward.
In the near-bear markets of 1998, 2011 and 2018, he says, the stocks that performed the worst in the downturn, when investors became convinced a recession wasn’t really within reach, ended up being stocks that fared the worst.
What is most likely to work in this scenario? Companies that have been hit hard but report solid earnings growth, and where Wall Street is unusually bearish — which means stocks will get an extra boost when these investors change their minds, as they did after the market crash in late 2018, says Emanuel.
He describes the group this way: “stocks with the lowest quartile index performance since the SPX peak on January 4 but higher quarter 2022e EPS growth, positive earnings, and steep options.”
The 15 stocks identified by Emmanuel and his team that fall into this category are down between 29% and 64% since January 4, when the S&P 500 index reached its most recent closing level. But based on analyst estimates, they are all expected to generate solid earnings growth in 2022.
The stocks are ranked below based on how much they have fallen since the last market rally. The ratios are calculated based on Friday’s closing prices.
In the case of Boeing, Snowflake, Zscaler, Lyft and Under Armor, Emanuel also recommends buying bullish July calls and selling downside as a way to lock in additional profits.