It was a sigh of relief in the Wall Street when major indices ended in the green on the first trading day of the week, as talks between the United States and China on trade agreement began. But experts believe that the market will take some time to recover from the damage inflicted by escalated trade tensions between the world's biggest economies and the Facebook data fiasco.
Keeping aside the recent market gyrations, market pundits are of the opinion that the economy is not in a bad shape after all. The Fed’s optimistic view also throws light on the same. The Fed Chairperson envisions economy growth of 2.7% in 2018, up from the previous forecast of 2.5%. The sound fundamentals only raises hope that the recent market volatility will be short-lived.
Quite obvious, corporate tax reform, infrastructure spending, rising consumer sentiment, robust job market and strengthening manufacturing activity are working in tandem to cushion the market. However, investors should be prepared for minor hiccups.
Let’s take the story forward from here and spot some safe pockets for investment.
Value Investing: An Ideal Strategy
Warren Buffett once said “It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” The strategy is quite simple — find stocks that are trading below their worth. An investment decision based on the intrinsic value of stocks seems foolproof in the present economic scenario.
Here, we have identified five stocks based on a favorable combination of a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Value Score of A or B.
Macy's, Inc. M, which sells apparel and accessories, cosmetics, home furnishings and other consumer goods, delivered positive earnings surprises in the last three quarters. The company, with a Value Score of A, has an expected EPS growth rate of 8.5% for 3-5 years. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
General Motors Company GM designs, builds, and sells cars, trucks, and automobile parts worldwide. It has a Value Score of A and an expected EPS growth rate of 8.4% for 3-5 years. This Zacks Rank #1 company delivered positive earnings surprises in the trailing four quarters, the average being 18.4%.
Huntington Ingalls Industries, Inc. HII, which is engaged in the designing, building, overhauling and repairing of ships, has an expected EPS growth rate of 15% for 3-5 years and a Value Score of B. This Zacks Rank #1 company delivered positive earnings surprises in the trailing four quarters, the average being 3.9%.
Tyson Foods, Inc. TSN, which operates as a food company, has an expected EPS growth rate of 11% for 3-5 years and a Value Score of A. This Zacks Rank #1 company delivered positive earnings surprises in the last four quarters at an average of 4.7%.
Arrow Electronics, Inc. ARW provides products, services and solutions to industrial and commercial users of electronic components and enterprise computing. The company, with a Value Score of A, has an expected EPS growth rate of 10.1% for 3-5 years. This Zacks Rank #2 company posted positive earnings surprises in the trailing four quarters, the average being 2.8%.
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