The S&P 500 Index (SPX) has rebounded sharply in recent months and now many investors anticipate the gauge ultimately will reach, and then exceed, its all-time high from January. It was at just 0.5% below its record today. "The bull market is resuming. You want to own stocks," Ari Wald, head of technical analysis at Oppenheimer, told CNBC. He added, "tech is broadly strong across capitalization, across industries." Wald also expects health care stocks to break out, and recommends medical technology company Medtronic PLC (MDT), as well as oil and gas producer EOG Resources Inc. (EOG) and tech giant Alphabet Inc. (GOOGL), the parent of Google. Bill Baruch, the president of Blue Line Futures, told CNBC that Apple Inc. (AAPL) is his top pick among tech stocks, even after its recent run. "You can't argue with the momentum," he asserted.
The Bull Market In Perspective
|Time Period||S&P 500 Gain|
Source: Yahoo Finance; computed through the close on August 8.
The four stocks recommended above already have been outpacing the broader market by wide margins so far in 2018. Both Apple and Medtronic also achieved new all-time highs in morning trading on August 9.
Poised To Rise Higher
|Stock||2018 Year-to-Date Gain|
|S&P 500 Index||6.9%|
Source: Yahoo Finance; based on adjusted close data through the close on August 8.
Highlights of the stories behind each stock are presented below.
Alphabet: 'Long-Term Uptrend'
Alphabet, the parent of Google, is a strong leader in a solid sector, according to Ari Wald of Oppenheimer. "Google, breaking out to the upside, breaking above $1,200, that's a resumption to the stock's long-term uptrend," he told CNBC. Alphabet reached an all-time high of $1,291.44 in July, and since has backed off slightly, trading about 2% lower on the morning of August 9. Looking at fundamental factors, Goldman Sachs believes that Alphabet is well-positioned on the basis of both a strong balance sheet and above-average long-term growth prospects. (For more, see also: 12 Stocks That Can Lead in a Rocky Second Half and The Bullish Case For Tech Stocks: Goldman.)
Apple: 'A Buy'
"I still think it's a buy, and I would buy it at $210, especially for the longer term," is what Bill Baruch of Blue Line Futures told CNBC about Apple, which reached an all-time high of $209.59 on the morning of August 9. Apple recently made history as the first publicly-traded U.S. company to reach $1 trillion in market capitalization. The company's recent quarterly profit report was met with enthusiasm by investors, and its longer-term outlook looks bright, based on several factors, including: financial strength, overall growth potential, expanding services business, and sales trends for key products such as the iPhone, AirPods and Apple Watches. (For more, see also: 4 Reasons Apple's Big Stock Gains Aren't Over.)
EOG Resources: 'Very Attractive Risk Reward'
Energy exploration company EOG Resources offers "very attractive risk reward," in the opinion of Ari Wald. He added, in his remarks on CNBC: "if energy works, I think this stock really goes higher. It has a lot more support on the downside." In the second quarter, EOG enjoyed year-over-year (YOY) revenue growth that was more than three times the average growth rate for its peers, per CSI Market, while its net margin was more than twice as large.
Rising oil prices will provide a tailwind for revenues and profits, though the U.S. Energy Information Administration (EIA) expects spot prices to trend downwards by about 2% to 3% from current levels through the end of 2019, per the EIA website. However, the EIA's analysis of futures trading indicates that the likely upside and downside versus the current spot price are both in the range of 20% or more.
Medtronic: 'You Want to Buy'
Based on technical analysis, Wald says that "Medtronic is just getting above multiyear resistance at $90, that's a fresh breakout, something you want to buy." The consensus among analysts rates Medtronic a strong buy, per Zacks Investment Research. The stock is "an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front," based on analysis by Zacks, which places Medtronic in the top 40% of stocks that it rates on the basis of value. However, Zacks gives Medtronic low scores for growth and momentum, leading to their overall rating of hold.