Yahoo Finance 3 Stocks to Play the Bull & Bear Tug O' War: PPC, NEM, NOW
Wall Street faced higher bouts of volatility on Wednesday, following a turnaround on Tuesday. Stocks, in reality, were subjected to a prolonged sell-off in the first three trading sessions of August, leading up to Monday.
August, anyhow, isn't a good month for stocks. This has led to confusion among investors about the future course of the equity market, which calls for investing in stocks such as Pilgrim's Pride Corporation PPC, Newmont Corporation NEM and ServiceNow, Inc. NOW that are unperturbed by market gyrations.
Roller-Coaster Ride for Investors
U.S. stocks slipped on Wednesday and failed to extend Tuesday’s bounce back that snapped a three-day rout for the major bourses, including the S&P 500. Chip stocks primarily led the losses in yesterday’s trading session, with prominent names such as NVIDIA Corporation NVDA and Super Micro Computer, Inc. SMCI plunging 5.1% and 20.1%, respectively.
Wednesday saw the S&P 500 stocks scaling upward in the morning session, only to lose steam in the afternoon session. The S&P 500 eventually ended in the red, down 0.8%. The broader index already registered a 3% drop on Monday, its largest one-day percentage decline since Sept. 13, 2022.
Wall Street’s “fear gauge,” known as the CBOE Volatility Index (VIX), more than doubled from last Thursday’s reading of 16.4 to 38.6 on Monday. VIX at the moment is trading near 28, more than its average around 20, a tell-tale sign that wild intraday swings are here to stay.
Bull & Bear Opinions
The unwanted dramatic intersession moves on Wall Street are due to the persistent tussle between bulls and bears. Bulls argue that the Federal Reserve may have waited too long to be dovish, but an interest rate cut is expected sooner or later. Such a move will spur business investment, increase consumer spending, and boost economic growth (read more: Fed's September Rate Cut Bets Rise: NVDA, GOLD, PHM to Gain).
The U.S. GDP, and its lifeblood — consumer spending — have already picked up in the second quarter, while the service side of the economy is humming. However, bears argue that contraction in factory activity coupled with weakness in the labor market may lead to a recession and dismiss the possibility of a Goldilocks economy (read more: 2 Top Recession-Proof Dividend Stocks to Buy Now: ATO, KMB).
The Winning Strategy: Stocks with risk-adjusted returns
As the stock market struggles for direction, investors should simply place bets on stocks that generate risk-adjusted returns. This can be done by creating a portfolio of low-beta stocks that are less volatile than the markets they trade in. Low beta ranges from 0 to 1.
However, investors may not associate a low-beta stock with promising returns. Therefore, low-beta stocks having positive earnings estimate revision have been chosen. Increasing earnings estimates signify a fundamentally sound company whose shares are poised to outperform the broader market in the long run. To top it, these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Pilgrim's Pride Corporation (PPC)
Pilgrim's Pride Corporation, the producer and distributor of chicken and pork products, is increasing its profitability by focusing on key customers through strategic investments and optimizing operational procedures.
PPC has a beta of 0.78. The Zacks Consensus Estimate for PPC’s current-year earnings has increased 27.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 183.4%.
Image Source: Zacks Investment Research
Newmont Corporation (NEM)
Newmont, a producer and explorer of gold, is making considerable progress with its growth projects such as the Tanami expansion. The acquisition of Newcrest also bodes well for Newmont.
NEM has a beta of 0.47. The Zacks Consensus Estimate for NEM’s current-year earnings has increased 14.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 71.4%.
Image Source: Zacks Investment Research
ServiceNow (NOW)
ServiceNow is gaining immensely from the increased adoption of its workflows by organizations undergoing a digital transformation.
The dominant player in the IT service market has a beta of 0.99. The Zacks Consensus Estimate for NOW’s current-year earnings has increased 2.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 28.1%.
Image Source: Zacks Investment Research
Shares of Pilgrim's Pride, Newmont and ServiceNow have gained 59.3%, 12.1%, and 9.9%, respectively, in the year-to-date period.
Image Source: Zacks Investment Research
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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Newmont Corporation (NEM) : Free Stock Analysis Report
Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
