- The S&P 500 closed within 1% of its all-time high.
- Our forward 30-90 day sector outlook favors Technology and Healthcare, but there is still a little fear with Utilities third.
- In addition to earnings reports, a significant number of economic reports will dictate which way the market will go.
Yesterday, the market continued its winning ways for the fifth consecutive day. The S&P 500 closed within 1% of its all-time high, and the DJI was even closer to its all-time high. Healthcare, Energy and Technology led the sectors while Financials, Telecomm, and Utilities finished slightly in the red. All three sectors in the red are typically flight-to-safety stocks, so despite lower than average volume, the market appears poised to make new highs.
Mid-cap Growth led the style/caps last week, up 2.87%, and Small-cap Growth trailed, up 2.22%. This week will bring well over 100 S&P 500 stocks reporting their March quarter earnings. AMD, Halliburton (NYSE:HAL) and Kimberly-Clark (NYSE:KMB) highlighted yesterday's earnings reports. Those reports were supplemented by a stronger than expected Leading Economic Indicators report yesterday morning.
After yesterday's close, Netflix (NASDAQ:NFLX) reported an earnings beat and the stock was up nearly 8% after hours; however, McDonald's (NYSE:MCD) trailed estimates on slumping U.S. Sales. In addition to earnings reports, chain store sales, existing home sales, building permits, new home sales, jobless claims, and durable goods will round out the busy week and likely determine the market's direction.
Treasuries were flat despite a robust market, so a continued rally is not assured. Our forward 30-90 day sector outlook favors Technology and Healthcare, but there is still a little fear with Utilities third. We continue to find undervalued growth stocks for you to consider during this earnings season.
3 Stock Ideas for this Market
The following stocks were selected from the top of our stock universe with great earnings growth projections, reasonable valuations and recent upward revisions to earnings estimates.
Valero Energy Corporation (NYSE:VLO) -Energy
- Trading for 11x current earnings and 9x forward earnings estimates
- Analysts have revised earnings estimates up in the last 7 days
- 99% projected EPS growth next quarter, 35% in 2014, 13% 5-year
- Reports Earnings April 29
KapStone Paper and Packaging Corporation (NYSE:KS)-Basic Materials
- Trading for 20x current earnings and 10x forward earnings estimates
- Analysts have revised EPS estimates up in the last 7 days
- 100% projected EPS growth this quarter, 158% next quarter, 65% in 2014, 26% 5-year
- Reports Earnings April 30
NXP Semiconductors Inc. (NASDAQ:NXPI)-Technology
- Trading for 44x current and 12x forward earnings estimates
- Analysts have revised earnings estimates up in the last 30 days
- 26% projected EPS growth this quarter, 44% next quarter, 29% in 2014, 36% 5-year
- Reports earnings April 23
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. I have no business relationship with any company whose stock is mentioned in this article.