October was tough on investors. While the current earnings season has so far been favorable, the market has negatively reacted to rising interest rates and ongoing trade tensions between the U.S. and China.
The market is looking to end October on a positive note, with the Dow Jones up nicely the last two days of the month, but as it stands the Dow is trading at 25,164 after starting the month at 26,651 for a loss of 5.6%. It could be a lot worse, as the index was as low as 24,445 just a few days ago.
If the earnings season continues as it has been the market should find its footing. Companies have been in a blackout period of share repurchases around their earnings reports, and as these blackout periods come to an end, we could easily see a nice earnings rally during November trading.
Overall economic conditions remain favorable, and earnings have been good, but there are still some big uncertainties that could derail any market rally during the final months of the year, so we want to be very careful in the stocks we play. The Stock Score Report ranks the overall stock universe using both technical and fundamental scores, and the combination of the two approaches has produces some solid winners through the year.
Let’s look at five stocks that are currently near the very top of the Stock Score Report rankings. All five have shown strength and should continue to build on their recent strength as the overall market regains its momentum.
Mellanox Technologies (MLNX) is a small semiconductor company with a market cap of $4.4 billion. Mellanox is the top-rated stock in the Stock Score Report at this time with an overall score of 97. The stock gets near perfect technical and fundamental scores, and shares are up sharply over the last week following a much better than expected set of third-quarter numbers. The company posted earnings of $1.33 which were up from $0.71 during the same period last year and well above the $1.20 estimate. Sales were also better than expected at $279.2 million versus the $275.5 million estimate. Analysts forecast earnings growth of 113% for the current year, and over the next five years profits are expected to rise by 45% per annum. Analysts see significant upside remaining the stock with an average price target of $110.27 versus its current price of $84.30.
QuinStreet, Inc. (QNST) is a small cap internet marketing company based in California. Stock Score Report gives QNST an overall score of 97. Technical and fundamental scores are near perfect, and the company recently reported very strong fiscal first-quarter numbers on October 30. Earnings of $0.14 were a penny above the consensus and up from $0.08 during the same period last year, while revenue of $112.9 million topped the $102.9 million, up from $87.4 million last year. The company is growing rapidly, and analysts expect to see profits rise by an average annual rate of 112% over the next five years. QNST currently trades at $14.88 with an average price target of $18.35.
Grand Canyon Education
Stock Score Report gives Grand Canyon Education (LOPE) an overall score of 93. The stock is up sharply over the last six weeks and is currently trading just pennies below its all-time high at $125.73. The company posted much better than expected Q2 numbers in early August and will report its next quarterly results on November 8. Analysts expect Q3 earnings of $1.00 per share, up from $0.81 during the same period last year. Earnings are expected to rise 22% for the full year, and by 17.6% per annum over the next five years. Analysts expect LOPE to build on its recent gains and have an average price target of $133.50 on the stock.
Jacobs Engineering (JEC) has been near the top of the rankings all year, and Stock Score Report currently gives the stock an overall score of 91. Technical scores are near perfect and JEC has a strong fundamental score of 81. Jacobs will not report earnings until November 20, with analysts forecasting a quarterly profit of $1.21 per share up from $0.98 during the same period last year. Jacobs is expected to grow earnings by 36% for the current year, and by 16% per annum over the next five years. JEC is trading at $76.25 with average price target of $82.20.
Thermo Fisher Scientific
After hitting an all-time high at the start of October, Thermo Fisher Scientific (TMO) sold off with the overall market during the first half of the month, but shares have rallied since the company’s better than expected Q3 report on October 24. Quarterly profits of $2.62 were up from $2.31 during the same period last year and better than the $2.55 consensus while sales of $5.92 billion easily outpaced the $5.7 billion forecast. Stock Score Report gives TMO an overall score of 89. The stock’s technical scores are fantastic, and its fundamentals look solid with a score of 78. The outlook is bullish and TMO should manage to trade back to its record high as the overall market finds its footing. TMO is now trading at $233.11 and analysts have an average price target of $265.33 on the stock.