Five stocks to consider in a weak market

October has been tough on investors. Rising interest rates are receiving much of the blame for the market drop, with trade tensions and political concerns also weighing on investors’ minds.

The market remains weary, but overall economic conditions remain favorable and now is not the time to sit on the sidelines. Earnings season is firmly underway, and if we see a string of strong quarterly reports the market should start to find its footing.

So far around 80% of the companies to report earnings have beat estimates, and that is expected to continue which should help bring enthusiasm back into the market. Another thing that could push the markets higher is that a lot of companies are in their blackout period for share repurchases. This blackout period for companies to buy back stock typically lasts from the last two weeks of a quarter until after earnings are announced. As these blackout periods end we could see a big earnings season rally as long as the current trend of strong reports continues.

For investors looking for stocks to buy while the market remains weak a great place to look is at the Stock Score Report. The screener combines both technical and fundamental data to rank the overall stock universe which provides a good list of names that have not only shown recent strength but should manage to build on those recent gains moving forward.

The following stocks have strong scores and should be considered buys in the current weak market.

 

Dollar General

Discount retailer Dollar General (DG) has traded to an all-time high despite the recent market sell off. The market remains incredibly bullish on the stock, and the Stock Score Report currently gives DG an overall score of 87 with near perfect technical scores and a fundamental score of 65. Consumer confidence remains strong and discount retailers have been among the top performing retail stocks. Dollar General has grown earnings by an average 12.3% annually the last five years, and analysts forecast earnings will continue to rise by 15% per annum over the next five years. DG’s valuation remains attractive with a forward P/E of 16.5 and currently trades at $111.33 with an average price target of $115.27. The company next reports earnings November 29.

Click here to see a full copy of the report.

Chart courtesy of stockcharts.com

Burlington Stores

Off-price retailer Burlington Stores (BURL) as been at the top of the rankings all year with the stock hitting a record high in September. Stock Score Report gives BURL an overall score of 92 with near perfect technical scores and a fundamental score of 79. The company will not report earnings again until November 29 and the stock has held up well during the current market sell off. Profits have risen 32.9% per annum over the last five years, and analysts forecast average annual earnings growth of 22.6% for the next five years. BURL has a forward P/E of 23 which is a little on the high side, but the strong earnings growth should keep strength in the stock. BURL trades at $166.92 with an average price target of $176.94.

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PayPal

Payment processor PayPal (PYPL) enjoyed a strong bull run over the last six months before selling off with the overall market in October. The stock sold off sharply in sympathy to the pull back in the overall market, but traders quickly returned to the stock following a better than expected third-quarter report and shares have erased most of their recent losses. Stock Score Report gives PYPL an overall score of 82 with a short-term technical score of 99. Earnings are expected to rise 26% during the current year and an additional 20% next year. Analysts have an average price target of $99.56 on the stock versus its current trading price of $86.28.

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Cigna

Health insurance provider Cigna (CI) gets an overall score of 85 from Stock Score Report. CI has trended strongly higher since early March but shares have cooled off in October along with the overall market. Rising interest rates have spooked the market but insurance providers are in a good position to capitalize on rising rates as they will generate higher interest income for premiums invested in fixed-income assets. Analysts forecast earnings growth of 14.5% annually for the next five years, and with a forward P/E of 13.6 there appears to be additional upside once the overall market regains its footing. CI is currently trading at $206.94 with an average price target of $237.27.

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Mastercard

Credit card stocks have been hot all year and Mastercard (MA) hit a new record high October 1 before selling off with the overall market the last two weeks. Stock Score Report gives MA an overall score of 87 and the stock gets strong technical scores despite shares pulling back with the overall market. Mastercard has enjoyed strong earnings growth, with profits rising 16.5% per annum the last five years and analysts forecast earnings will continue to rise by 22% annually over the next five years. The company will next report earnings October 30. Analysts forecast earnings of $1.68 per share, up from $1.34 during the same period last year. MA is trading at $200.48 and analysts have an average price target of $231.95 on the stock.

Click here to see a full copy of the report.

Chart courtesy of stockcharts.com