Strength Stocks In Volatile Market 1/2022

A few stocks are holding up in the current market correction. Nevertheless investors should be cautious, as the market indexes have been highly volatile and still trending lower.

Matson Stock

Honolulu-based Matson provides ocean transport with routes serving Hawaii, Guam, California, China and the South Pacific.

Matson has posted six straight quarters of earnings growth, the last four triple-digit gains. It has also reported five quarters in a row of revenue growth.

Port congestion has meant a boon for its expedited services throughout the pandemic. In Q3, EPS surged more than 300% to $6.53, while sales jumped 66% to 1.072 billion. Operating income in the third quarter skyrocketed to $377.9 million vs. $98.4 million in the year-ago period.

“The year-over-year increase in Ocean Transportation operating income in the quarter was primarily driven by continued strong demand for our expedited ocean services, including the new China-California Express,” said CEO Matthew Cox in an earnings call. 

Demand for Matson’s services remains strong as companies struggle to restock inventories amid continued elevated consumption.

Earlier this month, Matson guided Q4 estimates sharply higher, spurring a bounce from the 50-day line and ultimate breakout.

Matson shares rose 4.9% to 98.09 in Friday trading, up 7.8% for the week. MATX stock is in buy range from a 93.27 cup-with-handle buy point. The buy range extends to 97.93.

Its relative strength line is trending upwards and at a new high, according to MarketSmith chart analysis. Its RS Rating is 97 out of a best-possible 99, while its EPS Rating is a top-notch 99.

Several other ocean shipping firms, including Zim Integrated Shipping (ZIM).

Targa Resources Stock

Houston-based natural gas provider Targa operates mainly in the Gulf Coast, particularly in Texas and Louisiana. 

In Q3, Targa’s EPS bolted 400% to 80 cents, while revenue spiked 111% to $4.46 billion, as natural gas prices soared.

U.S. natural gas prices surged 10% on Friday, as the Northeast braced for frigid weather and winter storms. Earlier this month, the Southeast braved unusually cold weather. Meanwhile, the Russia-Ukraine crisis threatens to disrupt natural gas flows to Europe. That may also require more U.S. cargoes to Europe, tightening domestic supply.

TRGP stock edged up 0.4% to 57.95 on Friday, up 4.5% for the week. Shares are just below a 58.28 cup-base buy point. The chase zone extends to 61.19.

Targa’s relative strength line is sloping upwards and near highs not seen since 2019. Its RS Rating is 98, but its EPS Rating is just 45, as Q2 earnings suffered a 57% year-over-year decline.

Bunge Stock

St. Louis-based Bunge is a global agribusiness company specializing in soybean exports, food processing, grain trading and fertilizers.

Bunge has reported four quarters in a row of revenue and earnings growth. In Q3, it posted EPS of $3.72, a 51% year-over-year increase. Sales popped 39% to $14.1 billion.

On Jan. 20, Bunge entered into an agreement to buy a 33% stake in Sinagro to strengthen its grain orientation strategy in Brazil. Bunge is among the largest traders moving Brazilian soybeans throughout the world. The commodity is used for livestock feed.

However, there has been investor pressure on Bunge to combat deforestation in the Amazon rainforest. As a result, the company has had to focus more resources on its ESG policies recently.

Bunge reports Q4 earnings before the market opens on Feb. 9. FactSet analysts expect Bunge earnings per share to decline 6% to $2.87, on a 21.5% increase in sales to $15.316 billion.

BG stock rose 1.7% to 98.19 on Friday, up 4.1% for the week. Shares are rebounding after briefly dipping below their 50-day line. Bunge stock is back above a 97.09 buy point that technically is invalid due to triggering the 7%-8% sell rule, but rebounded from those intraday losses to close well off that loss.

Bunge’s relative strength line is rising. Its RS Rating is 93, and its EPS Rating is 93.

Raymond James Stock

Investment bank Raymond James Financial is rebounding from a brief slip below its 50-day line, as the Federal Reserve signals a rate hike in March.

Financial stocks get a profit-margin boost as interest rates rise. Brokerages like Raymond James can see an uptick in trading activity as well when interest income grows.

 St. Petersburg, Fla.-based Raymond James has posted four straight quarters of earnings growth and five straight quarters of sales gains.

In the latest quarter, earnings per share popped 73% to $2.06. That followed two quarters of triple-digit increases. Fiscal fourth-quarter sales climbed 29% to $2.73 billion.

RJF stock gained 3.15% to 104.09 on Friday, continuing to bounce back after tumbling below a buy point in the prior week. That 103.56 buy point is technically no longer valid, but investors could use a bounce off the 50-day line as a possible aggressive entry.

The stock’s relative strength line is ticking up and at a new high. Its RS Rating is 93, and its EPS Rating is 92.

AbbVie Stock

Drugmaker AbbVie has been posting record revenue, thanks to its medicines that treat cancer, hepatitis C and kidney diseases.

Its blockbuster drug Humira, which treats rheumatoid arthritis, accounts for more than 40% of its adjusted revenue last year.

Recently, it has also sought approval for other drugs too. AbbVie filed an application in December with the European Medicines Agency for approval to treat Crohn’s disease patients with its Skyrizi treatment. Skyrizi is already approved for plaque psoriasis and psoriatic arthritis in Europe.

AbbVie’s relative strength line is trending upwards near highs not seen since late 2019.

Its RS Rating is 95, and its EPS Rating is 93.

ABBV stock rose 1.4% to 137.92 on Friday. Shares have rebounded from the 50-day and 10-week line. That offers an early entry, while ABBV stock also has a 138.25 buy point from a three-weeks-tight pattern.

AbbVie earnings are due Wednesday, adding further risk to any buys.

Three stocks that have fallen more than 20% in the past six months but have strong businesses are Cresco Labs (OTC:CRLBF), Shopify (NYSE:SHOP), and Walt Disney (NYSE:DIS).  Although these declines might look concerning, buying these stocks now could pay off in the years ahead.

Cresco Labs

Legalization might not be coming to the U.S. marijuana industry anytime soon as President Joe Biden has not shown much interest in the issue. But that doesn’t mean the sector isn’t ripe for growth; cannabis research firm BDSA projects that the global marijuana market will grow at a compound annual rate of 22% and be worth more than $47 billion by 2025.

One company that can be a key part of that growth is multi-state operator Cresco Labs. The Chicago-based pot producer has been growing while consistently generating strong margins. In its most recent quarter, for the period ending Sept. 30, 2021, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $56.4 million and was more than 26% of revenue, which came in at $215.5 million. Just a year ago, the company’s top line was $153.3 million. And for the fourth quarter, Cresco expects to continue to see that revenue number climb sequentially to between $235 million and $245 million.

Through acquisitions in multiple markets, including Pennsylvania, Massachusetts, and Ohio, Cresco is steadily growing its presence and capitalizing on more opportunities. Trading at a price-to-sales multiple of just over 2, it’s also incredibly cheap compared to cannabis giant Curaleaf Holdings, which investors are paying more than 4 times revenue for.

Cresco is an exciting growth stock that could be a steal of a deal at its current share price.

Shopify

The pandemic has given shoppers extra motivation to buy goods online, whether it’s out of safety concerns or because vendors simply offer more-convenient pickup and delivery options. And nearly two years into the COVID-19 crisis, there continues to be strong growth in the sector.

During the Black Friday and Cyber Monday weekend of 2021, there was $6.3 billion spent on Shopify’s e-commerce platform, representing a year-over-year increase of 23%, and more than doubling 2019’s tally.

Impressive growth isn’t new for Shopify, as the business has grown from revenue of $389 million in 2016 to more than $2.9 billion in 2020. In the trailing 12 months, its sales have risen to more than $4.2 billion.

And there’s still no reason to expect the growth to stop. In January, the company announced a partnership with JD.com, a Chinese e-commerce site, which will make it easier for Chinese companies to sell to Western markets through Shopify’s platform.

Shopify is trading at levels not seen since mid-2020. Today, its business is much safer than in years past, recording both consistent profits and positive free cash flow. If you’re waiting for the stock to drop much lower, you might miss a golden opportunity to secure this top growth stock at a great price.

Walt Disney

Investors have been lukewarm about Walt Disney after the company’s fourth-quarter earnings report in November 2021 failed to impress. Not only did earnings per share miss the mark ($0.37 on an adjusted basis versus estimates of $0.51), but the company also warned that subscriber growth for Disney+ could be a challenge. For the period ending Oct. 2, 2021, the company added just 2.1 million subscribers from the previous quarter while analysts were expecting 9.4 million.

But Disney isn’t the only streaming company struggling with growing its subscriber numbers; rival Netflix also disappointed shareholders in its latest earnings report. With so many streaming services out there in addition to Disney+ and Netflix (like HBO Max and Peacock), the competition for subscribers is fierce, especially with inflation making it harder for consumers to juggle them all.

However, Disney is known for its quality content and isn’t a company I’d bet against in this arena. And it still isn’t operating at where it will be once COVID isn’t hampering its theme parks. For the past fiscal year, revenue from its parks, experiences, and products segment totaled $16.6 billion. Two years ago, that number was up over $26 billion.

Disney will be a big winner from a return to normal in the economy. And even if its streaming numbers may not experience significant growth, there are still plenty of opportunities in other areas of its business. Trading near its 52-week low and at a forward price-to-earnings ratio of 33 — similar to Netflix (which isn’t nearly as diverse of a business) — Disney’s stock is definitely one of the best bargains out there right now for growth investors.