A solid start to the third-quarter earnings season, a decline in jobless claims, and declining COVID-19 cases have been helping the major stock market indexes move higher lately. Therefore, we think it could be worth betting on fundamentally sound stocks Extreme Networks (NASDAQ:EXTR) and Universal Electronics (NASDAQ:UEIC). These two stocks are rated ‘Strong Buy’ in our proprietary rating system. Read on.Over the past few days, the major stock market indexes have rallied on optimism about a solid start to the third-quarter earnings season, a decline in jobless claims, and gradually lowering COVID-19 cases and hospitalizations. The S&P 500 notched a six-day winning streak, verging close to its record high on October 20.
While current supply chain disruptions, rising inflation, and the potential tightening of monetary policy in the near term remain concerns, the key factor driving the market higher is strong corporate earnings. According to a FactSet report, combining already reported results and estimates, the net profit margin for the S&P 500 members for the third quarter is 12.3%, which exceeds the 10.9% five-year average net profit margin.
Given this backdrop, we think if one has $2,000 in disposable cash, one should consider investing in Extreme Networks, Inc. (EXTR) and Universal Electronics Inc. (UEIC). These stocks possess strong growth attributes and are expected to continue gaining. They also possess a ‘Strong Buy’ rating in our proprietary POWR Ratings system.