A Slow But Likely Positive Week Ahead

Includes: ALK, NQ, SAIA
by: David Brown

Monday's market was marginal through most of the day, but all major indices ended the day in positive territory, led by the Nasdaq. It was the market's third positive close in a row and the fourth in the last five days. The S&P 500 ended the day at 1799.84, less than 3% from its all-time closing high of 1844.46. It is now nearly 60 points above its recent low on February 3 (about a 6% drop from its high).

The rebound seems to be driven by improvement in the yen/dollar trade, decent economic reports and so far, a better-than-expected corporate quarter with more revenue beats and better forward guidance than had been expected. The 10-year Treasury bill remains calm at 2.67%; although it's well off its high of more than 3%. One would expect it to rise from these levels as stimulant bond buying by the Fed continues to recede.

This week has a paucity of economic news ahead with ICSC chain store reports tomorrow along with Wholesale Inventories. The Federal Budget Report is on Wednesday. Initial Jobless Claims are on Thursday along with Retail Sales and Business Inventories. There is nothing of note on Friday and nothing at all next Monday for President's Day. So, corporate earnings and international reports will need to keep the market going. Barring something unforeseen, we would expect the market to continue its crawl back to its high.

Undervalued growth stocks continue to draw our interest, and we have listed a few below for your consideration. Those who are cautious might opt for continued hedging with VIX-related ETFs or options.

Market Stats

3 Stock Ideas for this Market

I selected the following stocks from the top of our stock universe, looking for great earnings growth projections with reasonable valuations.

NQ Mobile Inc. (NYSE:NQ) -Technology

Trading for 138x current and 12x forward earnings estimates

39% projected EPS growth current quarter, 79% next quarter, 59% this year, 34% next year, 40% 5-year

Alaska Air Group Inc. (NYSE:ALK) - Industrials

Trading for 10x current earnings and 10x forward earnings estimates

Analysts have revised EPS estimates up in the last 7 days

27% projected EPS growth current quarter, 29% next quarter, 20% in 2014, 12% 5-year

Saia Inc. (NASDAQ:SAIA) - Industrials

Trading for 14x current and 12x forward earnings estimates

Analysts have revised EPS estimates up in last 30 days

23% projected EPS growth current quarter, 13% next quarter, 13% 2014, 42% 5-year

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.