- Stock market headwinds emerging at resistance.
- Stock picking is key given uncertainty.
- Here are the top stocks to buy now.
- Looking for more stock ideas like this one? Get them exclusively at Top Stocks For Tomorrow. Get started today »
Substantial fiscal and monetary intervention has fueled a dramatic run-up in shares; however, the market is approaching resistance, suggesting a make-or-break moment for the recent rally is approaching.
Specifically, the S&P 500 is almost back to its 200-day moving average (DMA), raising concern sellers may hit the sell button ahead of a potential roll-over and retest. Anticipating headwinds, domestic equity funds saw net outflows of $3.2 billion in the week ending April 29, according to Refinitiv Lipper.
Alternatively, if the market digests this selling and recovers its 200 DMA, it could force those who are betting against stocks because of worsening economic data to cover short positions or deploy cash.
The potential for either a reversal or acceleration makes the current market direction murky. Adding uncertainty, legendary investor Warren Buffett acknowledged during his annual report this weekend that he didn't find bargains worth betting big on in March. He even tapped the brakes on repurchasing Berkshire Hathaway's (BRK.A) (BRK.B) own shares because he appears to have determined a deteriorating book value meant shares weren't as cheap as it appeared following a tumble in its share price.
Buffett's hesitation to commit cash shouldn't be viewed too negatively, though. His inability to cut deals may have been caused more by rapid, massive fiscal and monetary intervention. Companies simply didn't need to pay up to get financing from Buffett given the government's support of the credit markets.
The top sectors to buy now
With uncertainty creeping into the tape, fishing for stocks in the right pond could be increasingly important. I'm sharing our large-cap, mid-cap, and small-cap sector ranking in a minute, but first, here's how we compile our ratings.
Every week, we aggregate individual scores on over 1,500 widely-traded stocks by market cap to highlight sector and industry strength. This system is explained more here, but in short, it incorporates forward earnings growth expectations, historical trends in reporting earnings that beat Wall Street estimates, insider buying, short-term and long-term institutional money flow, forward valuation relative to historical valuation, contra-trend short interest analysis, and quarterly seasonality over the past decade.
Currently, the best large-cap sectors are healthcare, technology, services, and utilities. Healthcare, consumer goods, technology, and utilities are the top-ranked mid cap sectors, while healthcare, technology, financials, REITs, and basic materials score highest in small cap. Focusing on these sectors should provide the best odds for upside.
Source: Top Stocks for Tomorrow
The top stocks to buy
Historically, stocks follow earnings over time, insiders only buy for one reason; money flow reflects institutional optimism or pessimism, and seasonal patterns often rhyme. It's for these reasons that our system can be a great source of new investment ideas.
We shared over 80 stocks with members this week, including the following top-scoring stocks within these select sectors.
|BEST SCORING||4/29/2020||4 Week MA|
|Agnico Eagle Mines Limited||(AEM)||BASIC MATERIALS||GOLD||100||73.75|
|Kinross Gold Corporation||(KGC)||BASIC MATERIALS||GOLD||80||75|
|The Hain Celestial Group, Inc.||(HAIN)||CONSUMER GOODS||PACKAGED FOODS||110||102.5|
|Freshpet||(FRPT)||CONSUMER GOODS||PACKAGED FOODS||85||83.75|
|Central Garden & Pet Company||(CENT)||CONSUMER GOODS||PACKAGED FOODS||80||71.25|
|National Beverage Corp.||(FIZZ)||CONSUMER GOODS||BEVERAGES||80||67.5|
|Nautilus, Inc.||(NLS)||CONSUMER GOODS||LEISURE||80||77.5|
|Pool Corporation||(POOL)||CONSUMER GOODS||LEISURE||80||67.5|
|The Boston Beer Company, Inc.||(SAM)||CONSUMER GOODS||BEVERAGES||80||67.5|
|EQT Corporation||(EQT)||ENERGY||OIL & GAS E&P||80||72.5|
|CNX Resources Corporation||(CNX)||ENERGY||OIL & GAS E&P||75||61.25|
|PayPal Holdings, Inc.||(PYPL)||FINANCIALS||CREDIT SERVICES||100||78.75|
|Moody's Corporation||(MCO)||FINANCIALS||FINANCIAL DATA & STOCK EXCHANGES||95||76.25|
|MSCI Inc.||(MSCI)||FINANCIALS||FINANCIAL DATA & STOCK EXCHANGES||95||95|
|eHealth, Inc.||(EHTH)||FINANCIALS||INSURANCE BROKERS||90||91.25|
|FactSet Research Systems Inc.||(FDS)||FINANCIALS||FINANCIAL DATA & STOCK EXCHANGES||85||72.5|
|MarketAxess Holdings Inc.||(MKTX)||FINANCIALS||CAPITAL MARKETS||80||78.75|
|Centene Corporation||(CNC)||HEALTHCARE||HEALTHCARE PLANS||110||103.75|
|Johnson & Johnson||(JNJ)||HEALTHCARE||DRUG MANUFACTURERS||110||97.5|
|Penumbra, Inc.||(PEN)||HEALTHCARE||MEDICAL DEVICES||105||91.25|
|Becton, Dickinson and Company||(BDX)||HEALTHCARE||MEDICAL INSTRUMENTS & SUPPLIES||100||78.75|
|DexCom, Inc.||(DXCM)||HEALTHCARE||DIAGNOSTICS & RESEARCH||100||98.75|
|Hill-Rom Holdings, Inc.||(HRC)||HEALTHCARE||MEDICAL INSTRUMENTS & SUPPLIES||100||86.25|
|Sarepta Therapeutics, Inc.||(SRPT)||HEALTHCARE||BIOTECHNOLOGY||100||85|
|UnitedHealth Group Incorporated||(UNH)||HEALTHCARE||HEALTHCARE PLANS||100||83.75|
|AstraZeneca PLC||(AZN)||HEALTHCARE||DRUG MANUFACTURERS||95||80|
|Bristol-Myers Squibb Company||(BMY)||HEALTHCARE||DRUG MANUFACTURERS||95||76.25|
|Old Dominion Freight Line, Inc.||(ODFL)||INDUSTRIALS||TRUCKING||105||85|
|Marten Transport, Ltd.||(MRTN)||INDUSTRIALS||TRUCKING||100||80|
|Sturm, Ruger & Company, Inc.||(RGR)||INDUSTRIALS||AEROSPACE & DEFENSE||90||93.75|
|American Tower Corporation (REIT)||(AMT)||REITS||REITS-SPECIALTY||90||86.25|
|QTS Realty Trust, Inc.||(QTS)||REITS||REIT-INDUSTRIAL||90||90|
|Equinix, Inc. (REIT)||(EQIX)||REITS||REIT-SPECIALTY||85||85|
|Digital Realty Trust, Inc.||(DLR)||REITS||REITS||80||80|
|Chegg, Inc.||(CHGG)||SERVICES||EDUCATION & TRAINING SERVICES||105||82.5|
|Activision Blizzard, Inc.||(ATVI)||SERVICES||ELECTRONIC GAMING & MULTIMEDIA||95||93.75|
|Dollar General Corporation||(DG)||SERVICES||DISCOUNT STORES||95||93.75|
|Electronic Arts Inc.||(EA)||SERVICES||ELECTRONIC GAMING & MULTIMEDIA||95||87.5|
|Etsy, Inc.||(ETSY)||SERVICES||INTERNET RETAIL||95||83.75|
|Ollie's Bargain Outlet Holdings, Inc.||(OLLI)||SERVICES||DISCOUNT STORES||95||71.25|
|Tractor Supply Company||(TSCO)||SERVICES||SPECIALTY RETAIL||90||68.75|
|Amazon.com, Inc.||(AMZN)||SERVICES||INTERNET RETAIL||85||87.5|
|Carvana Co.||(CVNA)||SERVICES||INTERNET RETAIL||85||61.25|
|EverQuote||(EVER)||TECHNOLOGY||INTERNET CONTENT & INFORMATION||100||85|
|NetEase, Inc.||(NTES)||TECHNOLOGY||INTERNET CONTENT & INFORMATION||100||98.75|
|Coupa Software Incorporated||(COUP)||TECHNOLOGY||SOFTWARE-APPLICATION||95||73.75|
|Match Group, Inc.||(MTCH)||TECHNOLOGY||INTERNET CONTENT & INFORMATION||95||76.25|
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This article was written by
Limelight Alpha provides weekly sector, industry, and stock idea generation to day traders, swing traders, and buy and hold minded investors. Our research spans over 1,600 stocks and our quantitative scoring model has been used by professional investors for nearly 20 years.
Analyst’s Disclosure: I am/we are long SAM, PYPL, DXCM, BMY, EA, NFLX, AMZN, CVNA, ADBE, MDB, NOW, SMAR. 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.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.