U.S. stock markets are in the grip of volatility once again. Wall Street continued to suffer in the last two weeks after the Fed announced a 50-basis point interest rate hike, with losses deepening. Stocks took a further hit as disappointing retail sales for November sparked fears of a slowing economy.
Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have tumbled 9.9%, 19.9% and 32.6%. On Dec 19, these three stock indexes closed at their lowest levels in five weeks.
U.S. stock markets are likely to remain volatile in the near future. Market participants are not sure in which direction the U.S. stock markets will move and are skeptical of a year-end rally — popularly known as Santa Claus Rally — for this year.
On Dec 19, the S&P 500 Index — popularly known as the broad-market index — closed at 3,817.66. At this level, the benchmark Index is currently trading well below its 50-day and 200-day moving averages of 3,863.82 and 4,027.12, respectively. The 50 DMA and the 200 DMA are known as short-term and long-term support lines. This indicates that the index may see a further decline in the near future.
However, not all S&P 500 stocks are suffering. Several stocks from this stable are flying high in a highly disappointing 2022. We have selected five such stocks with a favorable Zacks Rank that have more upside left for 2023. These five stocks are as follows:
Schlumberger Ltd.
SLB
is the largest oilfield services player, with a presence in every energy market across the globe. Being the leading provider of technology for complex oilfields, SLB is better positioned to take up new offshore projects in international markets.
The significant improvement in oil prices is aiding its overall business. Schlumberger reported strong first-quarter results, driven by strong drilling activities in North America, Latin America and the Middle East. SLB is targeting net-zero greenhouse gas emissions by 2050.
Schlumberger has an expected earnings growth rate of 40.9% for next year. The Zacks Consensus Estimate for next-year earnings improved 1.3% over the last 30 days. The stock price of Zacks Rank #1 (Strong Buy) SLB has climbed 66.4% year to date. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Halliburton Co.
HAL
provides products and services to the energy industry worldwide. High commodity prices have increased demand for HAL’s services in North America, to which it is heavily exposed.
In particular, Halliburton’s key Completion & Production unit margins are likely to improve, with management expecting better pricing leverage going forward. Besides, Halliburton’s strong free cash flow generating ability indicates its financial strength.
HAL’s healthy relationship with national oil companies and digitization efforts also bode well. The increasing cloud-based data flow between sites and back office translates into expanded margins for Halliburton.
Zacks Rank #2 (Buy) Halliburton has an expected earnings growth rate of 41.9% for next year. The Zacks Consensus Estimate for next-year earnings has improved 2.1% over the last 30 days. The stock price of HAL has rallied 57.7% year to date.
W. R. Berkley Corp.
WRB
has been benefiting from its insurance business, performing well on the increase in premiums written over the past many years. W. R. Berkley has been investing in numerous startups since 2006 and has established new units in growing international markets.
W. R. Berkley’s international business is poised for growth supported by emerging markets. WRB’s solid capital position enables capital deployment. Investment in alternative assets should help improve investment income going forward.
Zacks Rank #2 W. R. Berkley has an expected earnings growth rate of 11.5% for next year. The Zacks Consensus Estimate for next-year earnings has improved 1.1% over the last 30 days. The stock price of WRB has surged 30.2% year to date.
Enphase Energy Inc.
ENPH
has revolutionized the solar industry by pioneering a semiconductor-based microinverter, which converts energy at the individual solar module level. ENPH enjoys a strong position as a leading U.S. manufacturer of microinverters.
Enphase Energy is striving to expand in Europe steadily throughout 2022. Such expansion plans may boost its long-term growth in the battery storage market. ENPH has also been making acquisitions to boost its long-term growth. It holds a strong solvency position.
Zacks Rank #2 Enphase Energy has an expected earnings growth rate of 25.8% for next year. The Zacks Consensus Estimate for next-year earnings has improved 2.4% over the last 30 days. The stock price of ENPH has jumped 66.7% year to date.
Deere & Co.
DE
is poised well to gain on improving commodity prices, which will encourage farmers to spend more on farm equipment. Strong replacement demand will also continue to boost DE’s top line. Demand for Construction equipment will likely benefit from anticipated growth in infrastructure investments. We expect Deere’s adjusted earnings per share to grow 16% in fiscal 2023, led by strong demand and pricing.
Product launches equipped with the latest technology to make farming automated will continue to provide DE with an edge over its competitors. DE will benefit in the long run from rapid growth in the global population as well as the rising worldwide infrastructure needs.
Zacks Rank #2 Deere has an expected earnings growth rate of 19.2% for the current year (ending October 2023). The Zacks Consensus Estimate for next-year earnings improved 1.7% over the last seven days. The stock price of DE has advanced 26.2% year to date.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
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