Pay Attention To Stocks That Are Breaking Out During A Market Correction
With U.S. equity markets off to a shaky start in 2022, it’s safe to say that stocks breaking out to new highs are few and far between. However, that doesn’t mean you have to stick to bottom fishing to find great opportunities in this tape. There are still some bright spots in the market that have been showing serious relative strength over the last few weeks and continue to attract new buyers.
In fact, a few stocks are breaking out to new highs at this time and could end up being huge winners if the overall markets find their footing. Consider this—if these stocks are able to break out to new highs with the markets in a corrective phase, imagine how much upside could be in store if the indices start to rally.
Here are 3 stocks currently breaking out in a mixed market:
1. McKesson
Shares of this leading pharmaceutical distributor have been showing remarkable strength over the last few months, and investors that are interested in exposure to a company that plays a key role in the country’s healthcare system should be very interested even as the stock trades at new highs.
McKesson (NYSE:MCK) is one of the "big three" in the pharmaceutical wholesale and distribution oligopoly and a company that also supplies medical-surgical products and equipment to healthcare facilities. The stock stands out as a great potential long-term investment for a few different reasons.
First, the company has huge negotiating leverage with drug manufacturers, which helps it acquire drugs at great prices. McKesson’s customers include large chain pharmacies like Walmart (NYSE:WMT), governmental agencies, and group purchasing organizations that tend to stick with the company for the long-term, as switching costs are high.
Additionally, McKesson has been divesting its operations in Europe, which is another positive since it should free up more capital to use towards share buybacks and high-growth potential areas of the business. McKesson’s Adjusted EPS jumped by 34% in Q3 to reach $6.15, and with primary care visits on the uptick again after the pandemic investors should expect continued earnings growth this year.
2. ZIM Integrated Shipping
Is there a stronger area of the market than shipping stocks? Companies like ZIM Integrated Shipping (NYSE:ZIM) continue to hit new highs in a mixed market and could be in for even more gains ahead. Shippers are befitting from a combination of factors at this time that continues to help them rally.
First, you have a massive demand for shipping services thanks to the supply chain issues that resulted from the pandemic. This has led to big increases in the price of shipping, which naturally translates to higher earnings for companies like ZIM. There are also geopolitical tensions and uncertainty about energy prices that could be sending shares higher in the coming weeks.
Israel-based ZIM is a standout shipping stock given its strong earnings, impressive dividend yield, and continued outperformance during a choppy period for markets. The company posted Q4 revenues of $3.47 billion, up 155% year-over-year, and saw its net income grow by a whopping 787% in the fiscal year 2021 to reach $4.65 billion.
The company also declared a $17.00 per share dividend, which represents 50% of ZIM’s 2021 net income. While shares are in overbought territory at the moment, this could be a great buy-the-dip opportunity in the coming sessions if the stock pulls back.
3. Bristol-Myers Squibb
This biopharmaceutical company is breaking out to the highest prices seen in years and could be a solid option for dividend investors to consider at this time. Bristol-Myers Squibb (NYSE:BMY) is focused on developing drugs for therapeutic areas including oncology, cardiovascular, and immune disorders.
With an appealing pipeline of new drugs along with several best-sellers including Revlimid and Opdivo, Bristol-Myers offers a nice combination of upside and stability, which is likely why investors keep adding shares.
The company reported Q4 adjusted EPS up of $1.83, up 25% year-over-year, on revenues of $12 billion, and recently received some positive news from the FDA about its leading oncology drug Opdivo. The drug has been approved for use with platinum-doublet chemotherapy for treating resectable non-small cell lung cancer before surgery in the neoadjuvant setting, which speaks volumes about how useful the drug could be going forward.
Finally, the fact that this stock offers investors a 3.1% dividend yield makes it a very interesting breakout stock to watch in the coming sessions.