Last week’s market performance was nasty again, especially for the Small-cap Growth style/cap, down 4%. Large-caps faired the best, losing only 2.7%. That’s ugly and today’s market seemed likely to be uglier today with escalating tensions over the weekend in Ukraine.
But once again, positive economic trumped the beating of the war drums. Retail Sales jumped up 1.1% over a projected 0.8% and last month’s tepid 0.3%, which was revised up to 0.7%. While autos led, sales were up solidly overall. Business inventories were about as expected with a positive tone. Citigroup (C) handily beat estimates to add to the morning’s surprises. As a result, the market was positive through most of the day, led by the DJI, up 0.91%, and the S&P 500, up 0.82%. NASDAQ had a less robust day in part due to the continued sell-off in the biotechnology industry late in the day. The NASDAQ ended up 0.57%.
Joining Utilities, two sectors moved into or near positive territory for the month: Energy and Non-Cyclical Consumer Goods and Services. While Non-Cyclicals isn’t exclusively iShares IYK, raw sector data moved it into the black (see market stats). Our 30- to 90-day sector outlook still favors Technology with Healthcare and Utilities still reflecting the flight-to-safety.
Market Stats
There will be plenty of additional economic data over the remainder of the week: Consumer Price Index tomorrow, NAHB Housing Market data, Building Permits, Industrial Output, Initial Jobless Claims and Philly Fed data. A veritable flood of earnings releases will round out the week taking us into the three-day holiday weekend. Undoubtedly, the Ukraine situation could help the market if tensions ease or hamper them should violent conflict increase.
Now that the market is well off its highs, this week offers a great opportunity to grab bargains and watch for positive surprises in well-priced stocks. The VIX related derivatives continue to provide opportunity for short term hedging.
3 Stock Ideas for this Market
The following stocks were selected from the top of our stock universe with great earnings growth projections, reasonable valuations and recent upward revisions to earnings estimates.
Emerge Energy Services LP (EMES) –Energy
- Trading for 76x current earnings and 14x forward earnings estimates
- Analysts have revised earnings estimates up in the last 7 days
- 5.8% dividend yield
- 325% projected EPS growth next quarter, 229% in 2014, 35% 5-year
Jazz Pharmaceuticals (JAZZ.O)—Healthcare
- Trading for 37x current earnings and 14x forward earnings estimates
- Analysts have revised EPS estimates up in the last 7 days
- 39% projected EPS growth this quarter, 38% next quarter, 30% in 2014, 20% 5-year
Skyworks Solutions, Inc. (NASDAQ:SWKS)—Technology
- Trading for 22x current and 12x forward earnings estimates
- Analysts have revised earnings estimates up in the last 30 days
- 23% projected EPS growth this quarter, 17% next quarter, 19% in 2014, 16% 5-year
- Reports earnings April 22