Wall Street has seen a carnage in January 2022 on rising rate worries. The pullback has led the Dow Jones, the S&P 500 and the Russell 2000 to their worst months since March 2020, while the Nasdaq is approaching for its worst month since October 2008, according to the data,
published on MarketWatch.
The Nasdaq has dropped 12.7% in the past one month.
Invesco QQQ Trust, Series 1
QQQ
,
Invesco NASDAQ 100 ETF
QQQM
,
Invesco NASDAQ Next Gen 100 ETF
QQQJ
,
Invesco ESG NASDAQ 100 ETF
QQMG
and
Simplify Nasdaq 100 PLUS Convexity ETF
QQC
have lost 12.4%, 15.1%, 12.4%, 12.4% and 15.5%, respectively, in the period.
At the end of Jan 28, 2022, the yield on the benchmark 10-year Treasury was 1.78% (the month’s high was 1.87% on Jan 18). The yield on the 30-year Treasury bond was 2.07%. The yield on the benchmark 2-year Treasury note was 1.15%. Rates have been rising in the United States on the Fed’s rate hike bets as soon as in March and more thereafter. Godman Sachs is projecting
more than four Fed rate hikes
this year (read:
3 Sector ETFs to Win Amid Rising Rates
).
The Nasdaq, heavy on technology and growth stocks, is now off more than 10% from its November record, ensuring the fact that it has entered the correction territory. Investors walked out of the high-growth tech shares as interest rates surged to start the new year.
Since the growth sector relies on easy borrowing for superior growth and its value depends heavily on future earnings, a rise in long-term yields cuts the present value of companies’ future earnings. Apart from the rate issues, economic reopening amid vaccination and easing Omicron concerns have been leading investors away from the stay-at-home tech stocks.
Against this backdrop, below we highlight a few top-ranked stocks of the Nasdaq that gained more than 20% in the past four weeks despite the index’s lackluster run. These stocks hailed from the biotechnology and energy sector though one was from the video-game industry.
Winning Stocks in Focus
Zynga
ZNGA
– Zacks Rank #2 (Buy) – Up 31.6% Past four Weeks
Zynga is a leading developer, marketer, and publisher of social game services. Zynga is expected to report earnings on Feb 9. Its year-over-year earnings growth estimate for the upcoming quarter is 100%.
Centennial Resource Development
CDEV
– Zacks Rank #1 (Strong Buy) – Up 30.7%
Centennial Resource Development is an independent oil and gas exploration and production company. It primarily develops unconventional hydrocarbon reserves in the Delaware Basin, which is part of the prolific Permian Basin. Its year-over-year earnings growth estimate for the upcoming quarter is 276.7%.
LAVA Therapeutics
LVTX
– Zacks Rank #2 – Up 30.7%
LAVA Therapeutics B.V. is a biotechnology company. It focuses on applying its expertise in bispecific gamma-delta T cell engagers to transform cancer therapy.
APA
APA
– Zacks Rank #2 – Up 30.7%
APA Corporation is one of the world’s leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Its year-over-year earnings growth estimate for the upcoming quarter is 2960%.
HighPeak Energy
HPK
– Zacks Rank #2 – Up 20.4%
HighPeak Energy is engaged in the acquisition, development and production of oil, natural gas and NGL reserves. Its year-over-year earnings growth estimate for the upcoming quarter is 880%.
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