While the Federal Reserve's modest growth estimates for the US economy along with assurance of at least one interest rate hike this year is keeping the market sentiments optimistic despite the odds, adding these fundamentally strong fallen angels in your portfolio might prove to be a good bargain.
The US stock market has witnessed a lot of volatility this year, which could be largely attributed to the lower-than-expected performance of the local economy as well as indirect brunt of the dawdling global economy.
A sharp decline in price is like a nightmare come true for investors, but there is more to such price falls than what meets the eye. The instability in the stock market can often be blamed on the momentary bumps caused by sell-offs, which are mostly triggered by panicked trades at the time of troubles (there have been quite a few this year).
On the other hand, sometimes valuation corrections for growth stocks lead to a steep decline in share prices, which generates golden opportunities to purchase such stocks. However, the catch is to ensure that fundamentals of these stocks are intact.
While the Federal Reserve’s modest growth estimates for the US economy along with assurance of at least one interest rate hike this year is keeping the market sentiments optimistic despite the odds, adding these fundamentally strong fallen angels in your portfolio might prove to be a good bargain.
3 Stocks to Bet On
LendingClub Corporation (LC - Snapshot Report): Founded in 2006 by Renaud Laplanche, LendingClub is a peer-to-peer lending company orchestrating online dealings between creditworthy borrowers and lenders. This California-based company’s exclusivity lies in its unique platform that offers loans at lower rates than traditional banks.
Despite losing nearly 44% year to date, LendingClub displays strength in top-line growth, robust loan improvement and enhanced credit quality, which justifies its Zacks Rank #2 (Buy). Further, the company’s projected EPS growth (F1/F0) of 79.2% validates management’s positive guidance for the upcoming results and signals a turnaround in the price chart in the near term.
Moreover, the company’s long-term (3-5 years) estimated EPS growth rate of 20.0% promises returns to investors in the long run.
Groupon, Inc. (GRPN - Analyst Report): Launched in 2008, this Illinois-based company is a global e-commerce marketplace connecting millions of subscribers with local merchants by offering activities, travel, goods and services in more than 45 countries. The company’s specialized deals along with comprehensive marketing campaign combined with merchant solutions gives it a competitive edge over peers.
Though shares of Groupon have declined around 41% year to date, this Zacks Rank #2 company remains a good investment with its projected EPS growth (F1/F0) of 77.8%. Also, riding high on e-commerce and international expansion, the company’s long-term (3-5 years) predicted EPS growth rate looks promising at 26.7%.
EnLink Midstream, LLC (ENLC -Snapshot Report): This Texas-based company, formerly known as Crosstex Energy Inc., is involved in natural gas gathering, treating, processing, transmission, distribution, supply and marketing, and crude oil marketing.
The 15% year-to-date fall in the share price of EnLink Midstream offers a good entry point into this Zacks Rank #1 (Strong Buy) company, which has a projected EPS growth (F1/F0) of 64.2%. High proportion of fee-based revenue and strong amount of minimum volume commitments that provide volume stability and support cash flow visibility continue to fuel the company’s growth.
Moreover, the company’s long-term (3-5 years) projected EPS growth rate of 17.0% further substantiates the reasons to own this stock now.
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