What the Market Wants: Market on Spring Break

Today was the beginning of “spring break” for the market.  At least it seemed that way with a very low trading volume of only 600M shares on the NYSE.  Either the college crowd does more trading than we imagined or parents are taking the week off as well.

The market barely woke up for the session with the S&P 500 down 0.05% and the NASDAQ down 0.03%. However, the DJI must have gotten extra sleep this weekend as it was up 0.21%.  Small caps took a bigger hit with the Russell 2000 dropping nearly 0.50% percent. There was nothing major in the news other than a disappointing trading figure from China. Indeed, the whole week will only include a meager four major economic reports with Wholesale Inventories tomorrow, Retail Sales and Jobless Claims on Thursday, and Producer Price Index on Friday. 

The only positive sectors today were Healthcare and Financials, each up a paltry 0.4%; Industrials also eked out a tiny gain. The treasuries were a tad weak with the 10-year yield picking up 2 bps at 2.78%.

Last week was much more robust with the Ukrainian scare on Monday shaking up world markets for a day until hostilities eased. There was plenty of posturing back and forth across the border, but the markets decided to more or less ignore the standoff until something more ominous develops. 

Economic news was somewhat muted following Monday’s releases, but the markets made up Monday’s fall quickly and drove ahead to new highs with the S&P 500 barely edging over 1880 on several occasions.  NASDAQ also reached new highs while the DJI didn’t quite set a new high.

Last week’s style/caps were led once again by Small-cap Growth stocks, up 1.87% on the week, and Large-cap Growth brought up the bottom, up 0.67%. From a sector viewpoint, Financials and Industrials, up 2.17% and 1.58% respectively, led the way while Utilities faltered down -0.99%.  Others sector failing to gain for week included Basic Materials, Healthcare and Telecom.

Market Stats

This week is likely to remain very quiet with little economic news, a dearth of new corporate earnings releases, and lots of college kids having fun probably not so quietly.  The bargains are still out there.

3 Stock Ideas for this Market

The following stocks were selected from the top of our stock universe with great earnings growth projections, reasonable valuations and recent upward revisions to earnings estimates.

Valero Energy Corporation (VLO) –Energy

  • Trading for 10x current earnings and 9x forward earnings estimates
  • Analysts have revised earnings estimates up in the last 7 days
  • 18% projected EPS growth current quarter, 90% next quarter, 31% in 2014, 10% 5-year

Huntington Ingalls Industries Inc. (HII)—Industrials

  • Trading for 20x current earnings and 13x forward earnings estimates
  • Analysts have revised EPS estimates up in the last 7 days
  • 85% projected EPS growth current quarter, 56% next quarter, 36% in 2014, 18% 5-year

Skyworks Solutions Inc. (SWKS)—Technology

  • Trading for 22x current and 12x forward earnings estimates
  • Analysts have revised EPS estimates up in last 7 days
  • 22% projected EPS growth current quarter, 16% next quarter, 18% in 2014, 16% 5-year
What the Market Wants
david / Tag: VLO, HII, SWKS /