For the last few weeks we have been keeping a watch on the new Stock Score Report service by the stock and options research company InvestorsObserver.
InvestorsObserver uses proprietary software to rank the entire universe of stocks by combining both their technical and fundamental data. By combining both technical and fundamental data, you are able to highlight stocks that are not only trending higher in the current market, but also have strong enough underlying fundamentals to warrant additional upside potential.
Obviously stocks that have shown recent strength will score high in the service’s technical rankings, but if you can combine a stock’s recent strength with solid fundamentals you get a stock that Wall Street is likely to keep driving higher.
With the overall market trading near record highs, it is more important than ever to narrow the stock universe to those stocks that possess the strongest technical and fundamental data. A lot of investors are concerned that a market sell off is around the corner, and should that happen, the stocks that are the strongest from both a technical and fundamental standpoint will get hurt the least, and as such are very defensive plays when the market is near record highs.
Let’s take a closer look at five stocks that rank very highly in InvestorsObserver’s Stock Score Report.
First Data Corp.
First Data Corp. (FDC) is a highly ranked stock on InvestorsObserver. The stock gets an overall ranking of 93 from InvestorsObserver’s Stock Score Report, thanks to strong scores in both its fundamental and technical ranks. First Data Corp. provides electronic commerce solutions for merchants and credit card processors. Improvements in the overall economy, and strong consumer confidence resulting from low unemployment and the stock market at a record high is great for FDC’s business. The company is expected to grow earnings by 15.9% this year, and over the next five years the company is forecast to grow earnings by 11.2% per annum. The strong earnings growth has propelled the stock to record highs, and the company’s strong underlying fundamentals should keep shares moving in the right direction. FDC is trading at $19.01, and analysts have an average price target of $20.89 on the stock.
Air Lease (AL) is in the business of renting commercial jet transportation aircraft. The stock recently hit a new record high, driven mostly by expected future earnings growth. Analysts expect to see the company grow its earnings by 17.7% next year, and over the next five years profits are forecast to rise 13.9% per year. The stock gets an overall ranking of 90 from InvestorsObserver’s Stock Score Report, with high rankings across the board. Even with the stock’s recent strength, its valuation remains attractive, with a P/E of just 12.8. Given the low valuation, and the strong earnings growth estimates, there is no reason to believe the stock has hit a ceiling. AL is currently trading at $44.00, and analysts have an average price target of $49.22 on the stock.
Steel Dynamics (STLD) manufactures steel products and engages in metals recycling. The stock is trading just shy of its record high, with a P/E of 18. Improvements in the overall economy and promises of increased federal spending on infrastructure has helped the steel sector, and Steel Dynamics is forecast to grow earnings by 40.3% during the current year, and by 20.4% per annum over the next five years. The stock gets an overall ranking of 89 from InvestorsObserver’s Stock Score Report. The high score is a result of very strong short-term technicals, with the fundamentals being a little weaker than we would like to see, but still very strong. The company reported earnings on October 18, with earnings in-line with the consensus and sales topping estimates. Steel Dynamics will next report earnings on January 16. STLD is trading at $39.46, and analysts have an average price target of $42.45 on the stock.
Wabco Holdings (WBC) manufactures automotive parts. After years of record breaking sales numbers, the auto sector has cooled off a bit in 2017, but it remains on very solid ground. Wabco recently traded to a new record high, and the company is forecast to grow earnings by 14.5% during the current year, and an additional 12.8% next year. With the stock trading near its record high, it receives very high technical scores, but its fundamental scores are a little lower than we like to see. Despite the slightly low fundamental score, the strong technical scores give the stock an overall ranking of 87 from InvestorsObserver’s Stock Score Report. The stock is trading at $150.91, with an average price target of $158.87.
Honeywell International (HON) is a diversified technology and manufacturing company. Strength in the overall economy has driven the stock steadily higher over the last five years, and shares are currently trading just shy of their all-time high. The stock’s valuation remains reasonable, with a P/E of 22.7, and analysts forecast earnings growth of 7.4% during the current year, and an additional 9.7% in 2018. The stock has good fundamental and technical scores, and gets an overall ranking of 87 from InvestorsObserver’s Stock Score Report. Hon trades at $146.41, and analysts have an average price target of $155.62 on the stock.