Top Stocks for August 2022

The Russell 1000 Index is a market-capitalization-weighted index of the 1,000 largest publicly traded companies in the U.S. It represents approximately 92% of the total market capitalization (market cap) of all listed stocks in the U.S. equity market. For this reason, it is considered a bellwether for large-cap investing. Some of the largest companies in the index include Apple Inc., Johnson & Johnson, and The Walt Disney Co.

Large companies face new challenges in the coming months. A confluence of forces including Russia's invasion of Ukraine, the COVID-19 pandemic, and inflation have pushed central banks globally to raise interest rates. This has prompted many analysts and economists to predict a recession. However, the U.S. produced 528,000 jobs in the month of July, well above most analyst predictions, potentially signaling a stronger economy than anticipated by many economists.

The Russell 1000 provided a total return of -7.0% over the past 12 months. This market performance number and all data below are as of August 6, 2022.

Here are the top five stocks across all sectors with the best value, the fastest growth, and the most momentum.

Best Value Stocks

Value investing is a factor-based investing strategy that involves picking stocks that you believe are trading for less than what they are intrinsically worth, usually by measuring the ratio of the stock’s price to one or more fundamental business metrics. A widely accepted value metric is the price-to-earnings (P/E) ratio. Value investors believe that if a business is cheap compared to its intrinsic value (as measured by its P/E ratio, in this case), then the stock price may rise faster than that of others as the price comes back in line with the worth of the company. These are among the stocks with the lowest 12-month trailing P/E ratio.

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• United States Steel Corp.: United States Steel makes high value-added steel products, including its XG3 advanced high-strength steel, which is used by automakers to produce lighter-weight vehicles. It serves the automotive, construction, appliance, energy, containers, and packaging industries and has operations in the U.S. and Central Europe. U.S. Steel has an annual raw steelmaking capability of 26.2 million net tons. The company reported Q2 2022 earnings results on July 28. Net earnings declined slightly while net sales grew by 25.2% year-over-year (YOY). U.S. Steel said strong performance across its operating segments drove performance.
• NRG Energy Inc.: NRG Energy sells power, natural gas, and services to residential, commercial, and industrial customers throughout the United States and Canada. Its primary brand names include Reliant, Direct Energy, Green Mountain Energy, and XOOM Energy. NRG employs more than 6,500 and has over six million customers.
• Azenta Inc.: Azenta is a life sciences company providing sample management and genomic services including drug development, sample and material storage, and clinical trial management. Its customers are pharmaceutical, biotechnology, and life sciences research companies and institutions. It employs 3,000 in operations in North America, Europe, and Asia. The company reported on July 26 that it had partnered with medical swab technology company Rhinostics. The partnership will enable scalable automated swab processing, decreasing turnaround times and costs for swab sample collection for COVID-19 and other testing.
• Annaly Capital Management Inc.: Annaly Capital Management is a diversified capital management company that operates as a real estate investment trust (REIT). It has investments across the mortgage finance industry. Its investment portfolio includes agency mortgage-backed securities (MBS), residential real estate, and mortgage servicing rights. It has about $82 billion in total assets. In early August, Annaly announced it planned to make a public offering of 100,000,000 shares of its common stock for anticipated gross proceeds of roughly $665 million, less offering expenses. The underwriters of the offering have a 30-day option to purchase up to 15,000,000 additional shares.
• Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets. The company also supplies stainless steel tubing and other products. It employs 27,000 across 68 operating facilities.

Fastest Growing Stocks

These are the top stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

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• American Airlines Group Inc.: American Airlines Group is a major international air carrier. It offers an average of close to 6,700 flights per day across more than 50 countries. American Airlines reported Q2 2022 earnings results on July 21. It posted its first quarterly profit since the start of the COVID-19 pandemic on surging revenue YOY, driven by skyrocketing demand.
• Coterra Energy Inc.: Coterra Energy is an independent oil and gas exploration and production company with operations focused in the Permian Basin, Marcellus Shale, and Anadarko Basin. Its core position includes 234,000 net acres.
• Hexcel Corp.: Hexcel is an industrial materials company that manufactures advanced composite materials. Its products are used in aerospace, industrial, and space and defense applications. The company employs 4,800 and has 23 manufacturing plants. On July 25, the company announced a quarterly cash dividend of $0.10 per share of common stock. The dividend is payable on Aug. 12 to shareholders as of Aug. 5, 2022.
• Camden Property Trust: Camden Property Trust is a REIT which owns, manages, develops, acquires, and builds multifamily apartment communities. As of April 30, 2022, it owns and operates about 170 properties including more than 58,000 apartment homes. Camden reported Q2 2022 earnings on July 28. Net income surged more than 15-fold on solid property revenue growth YOY. Growth was driven in part by strong same property revenue improvement, offset partially by an increase in same property expenses.
• Devon Energy Corp.: Devon Energy is engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs). In early 2021, Devon Energy and WPX Energy completed an all-stock merger of equals. Its operations are focused on the U.S. where it employed 1,600 people as of Dec. 31, 2021.

Stocks With the Most Momentum

Momentum investing is a factor-based investing strategy that involves investing in a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform will not suddenly disappear. In addition, other investors seeking to benefit from the stock’s outperformance will often purchase the stock, further bidding its price higher and pushing the stock higher still. These are the stocks that had the highest total return over the past 12 months.

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• Antero Resources Corp.: Antero Resources is an oil and natural gas company that explores, develops, and produces natural gas, oil, and NGL properties in the Appalachian Basin. It holds 612,000 net acres in the Marcellus Shale and Utica Shale.
• Avis Budget Group Inc.: Avis Budget Group provides vehicle rental services and mobility solutions. Its primary brands include Avis, Budget, and Zipcar. Across its brands, it operates over 11,000 locations in about 180 countries. On August 1 the company announced earnings results for Q2 2022. Net income nearly doubled to a quarterly record while revenue climbed by 37% YOY. The company attributed the performance to successful fleet management and cost control measures, among others.
• Devon Energy Corp.: See company description above.
• EQT Corp.: EQT Corp. is a natural gas production company with operations in Pennsylvania, West Virginia, and Ohio. It is the largest producer of natural gas in the U.S. On July 20, the company announced a quarterly cash dividend of $0.15 per share. The dividend is payable on Sept. 1 to shareholders as of Aug. 9, 2022. It represents a 20% increase to the company's regular quarterly cash dividend.
• Occidental Petroleum Corp.: Occidental Petroleum is primarily an energy exploration and production company with operations in oil, natural gas liquids, and gas. Its midstream business stores and transports oil, gas and other products. The company also makes and markets a variety of chemicals. Occidental currently stores up to 20 million tons of CO₂ per year.

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