The first dip of 2018 didn’t last very long. Stocks were back to making all-time highs on Thursday; a day ahead of the first round of big releases for this earnings season. Tomorrow we get reports from a few of the banking giants, including Wells Fargo (NYSE:WFC), JP Morgan and PNC Financial (NYSE:PNC). The market appears to be very confident that corporate results will be strong enough to keep the good times rolling.
The major indices started the day on positive ground and then gained steam throughout the session. The Dow climbed 0.81% today (or more than 200 points) to finish at 25,574.7; the index closed above 25,000 just one week ago! The NASDAQ was also up 0.81% to 7211.8 and the S&P increased 0.7% to 2767.6. Each of those were fresh all-time highs.
The Russell 2000 also joined the party and had the most impressive advance on a percentage basis, jumping 1.73% to finish at its own record of 1586.8.
Just as the market returned to making new highs, so too did the editors return to making new buys. Earnings season is the Surprise Trader’s favorite time of year, so it made complete sense for Dave to add two new companies that are scheduled to report next week. Meanwhile, regional banks are expected to do well in a rising rate environment, and ETF Investor added a name that should be able to capitalize. Finally, Value Investor added a couple of stocks as well, one from the energy space and the other from retail. Learn all about these moves in the highlights section below:
Today's Portfolio Highlights:
Surprise Trader: Earnings season is about to pick up…and so is activity in this portfolio. Dave promised a couple of buys before the end of the week, so here they are. Firstly, the editor is bullish on investment managers right now. Morgan Stanley (NYSE:MS) has beaten the Zacks Consensus Estimate for eight straight quarters and earnings estimates continue to rise. The stock was added today with a 12.5% allocation ahead of its report before the bell next Thursday.
The second buy is a vote of confidence in the US economy. GATX Corp (GATX) leases railcars and has an 8.3% Earnings ESP for its upcoming report. The company announces at the same time as MS next week and goes into the portfolio with the same 12.5% allocation. Read more about both of these buys in the complete commentary.
ETF Investor: It’s looking pretty good for regional banks these days, given the improving economy, tax cuts, deregulation and especially rising interest rates. One of the most popular products in this space is SPDR S&P Regional Banking ETF (MX:KRE). The fund has $4.6 billion in assets under management, but Neena really likes that it is equal-weighted among 109 securities. Equal weighting allows for greater exposure to mid- and small-cap banks, which should benefit the most from tax reform. Read her complete commentary for more on this new addition.
Value Investor: Shares of C&J Energy Services (CJ) have moved higher the past couple of months, but the stock is still cheap. This well construction company got good reviews from the market in November on its more than $130 million acquisition of oilfield cementing services company O-Tex. While it is still likely to lose money in 2017, this Zacks Rank #2 (Buy) is expected to make $2.66 in 2018 with a strong demand outlook for 2019. It doesn’t report until early February, but Tracey bought it today.
But that wasn’t all. The strong holiday retail numbers convinced the editor to pick up Macy’s (M), which she had been looking at for a while. Tracey’s been a bit concerned about the department store giant since 2018 estimates are currently lower than 2017’s, but that could change as more analysts get bullish on the company. Plus, M is “still dirt cheap” and currently has a dividend that yields 5.9%. Like CJ, the stock is a Zacks Rank #2 that reports in February. Get more specifics on these moves in the full write-up.
Good Evening,
Jim Giaquinto
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