After last week's selloff, the broader market is once again moving in the right direction and is trading just shy of all-time highs.
Spreading concerns over the severity of the coronavirus virus hurt stocks last week, but Wall Street is now looking past those concerns and is again rallying. With the overall market approaching all-time highs a lot of the biggest name stocks in the market are also testing their highs or setting new all-time highs.
Investors remain bullish but are also cautious regarding the market's valuation. Investors want to remain in the market, but it is more important than ever to look for good values and strong growth potential.
Wall Street loves to see growth, and profit growth is essential for stocks to continue building on their gains.
Here are a handful of stocks that are hitting new highs with attractive valuations and strong growth estimates.
Microsoft (MSFT)
Tech titan Microsoft (MSFT) continues to drive the overall bull market with the stock hitting another all-time high in Tuesday's trading session. Microsoft continues to impress Wall Street with its strong growth in cloud computing, which is currently the fastest-growing sector in tech. Microsoft has shown impressive annual earnings growth of 18% over the last five years and looking ahead analysts expect profits to rise by 14.6% per annum for the next five years. With MSFT trading at a record high, the stock's valuation has risen to 28 times future earnings, which on the surface appears high but considering how strong earnings have risen and how strongly they are expected to rise the stocks remains reasonably priced and Wall Street should keep driving shares higher as long as the company is able to keep pace with future estimates. Microsoft posted its fourth-straight top and bottom-line beats when it reported Q2 earnings in January, and Wall Street remains very bullish on the stock's outlook.
Allstate (ALL)
Insurance provider Allstate (ALL) traded up to a new all-time high on Tuesday with the stock hitting a new high of $121.13. Allstate is another example of a stock benefiting from strong earnings growth, with profits up 16% annually the last five years, and analysts forecast profits to continue to rise at an annual rate of 10.6% over the next five years. ALL remains a very attractive value with shares trading at just 11.7 times future earnings. The insurance sector has remained strong, and Allstate has been a driving catalyst in the sector's strong performance. The company has outpaced estimates each of the last four quarters, and if the company is able to extend its streak of quarterly beats there remains a lot of upside in this undervalued stock. ALL reports after the market close Tuesday with the consensus calling for earnings of $3.12 per share, but the street expects another positive earnings surprise with a whisper number of $3.41.
Johnson & Johnson (JNJ)
Johnson & Johnson (JNJ) hit a new all-time high in Tuesday's action, with the stock rising as high as $152.74. Johnson & Johnson is most widely known for its consumer goods, but the company is very diversified with operations in healthcare equipment and the pharmaceutical sector. JNJ has shown the market annual earnings growth of 10% over the last five years and looking ahead the company is expected to grow profits at an annual rate of 5.7% over the next five years. Despite hitting a new all-time high the stock remains an attractive value with a forward P/E of 15.6. The company most recently reported earnings in late January, with a small earnings beat and a small revenue miss. The market focused on the better than expected earnings and has pushed the stock to new highs. With earnings behind it, the stock should continue to build on recent gains barring a selloff in the overall market. JNJ trades at $151.86 with an average price target of $159.85.
